A Theology of Enjoyment for a Post Capitalist Life

The topic of this lecture was proposed by Cathy Bone.  I had originally suggested “How God Works in Evolution: A Process View.”  In the U. S. this has been a hot topic for some time because of the objection of conservative Christians to the Neo-Darwinian theory of evolution.  I share the objection to Neo-Darwinism, but I object just as strongly to the alternatives that these Christians have thus far proposed.  So I am proposing an alternative based on the perspective of process philosophy.

 

But I was reminded that north of the 49th parallel you have not been hung up on this issue, and I commend you for that.  Whereas south of that parallel it is hard to get an audience that will listen to a discussion of economic theory, in Canada this is recognized as important.  Bone suggested “A Process Theologian’s Critique of Capitalism.”  Since I have been engaged in this critique, especially of the global form or capitalism, for several decades, I gladly agreed.  But then she came back with the title “A Theology of Enjoyment for a Post-Capitalist Life.” 

 

I’m glad she did so.  With that title I can’t just rehash what I have been doing for years.  The title pushes me to take a more optimistic attitude toward the future.  And in addition it leads me to expound an element in process thought that I too often omit, that is “enjoyment.”

 

I will begin with that. For my mentor in process thought, Alfred North Whitehead, the aim of God in the world is the increase of intrinsic value.  It is my belief, as Whitehead’s, that intrinsic value occurs only in experience and characterizes all experience. We are called to contribute what we can to the fulfillment of this aim. 

 

Of course, this idea is the beginning of reflection about how we are to live, not the end.  There are the questions of value in the immediate present and value in the future, the value of my experiences and the value of others.  Then there is the question: in what does intrinsic value consist?

 

Modern value theory has emphasized such terms as pleasure and satisfaction.  The Greeks spoke of happiness.  Whitehead said very little about either pleasure or happiness, and instead developed an elaborate theory emphasizing, beauty, truth, goodness, peace, and adventure.  There is no ready way to sum it up.  But, especially in has magnum opus, Process and Reality, he wrote frequently of “enjoyment.”  Clearly, this enjoyment goes far deeper than the idea expressed in the recommendation that we eat, drink, and be merry.  A theology of enjoyment makes good sense for a follower of Whitehead. 

 

Although Whitehead never identifies intrinsic value and enjoyment, it will not mislead much to say that the end of life is to increase God’s enjoyment by increasing enjoyment in the world.  Accordingly, we may make the theological statement that God wants us to enjoy ourselves, to enjoy one another, to increase the enjoyment of other people – all other people – and of the other creatures with whom we share this planet as well.  To enjoy our own lives more and to contribute to the enjoyment of others is to contribute to God’s enjoyment.  Charles Hartshorne calls the ethics of process thought “contributionism.”  There can be no higher goal than to contribute to God’s enjoyment. But there can be no tension between contributing to God’s enjoyment and contributing to the enjoyment of God’s creatures.

 

This is not the place to develop this theology or this ethic theoretically.  In discussions of the goal that the economy should serve, the discussion has recently focused on “happiness.”  For our purposes here, enjoyment and happiness are sufficiently similar that we will grant them equivalence.  The first point to make, one that at some level everyone already knows, is that the capitalist economy is a very inefficient way of increasing either happiness or enjoyment in the world.

 

Despite the fact that everyone, at some level, knows this, the point needs to be argued because we are all also partly brainwashed by a theory that suggests that global capitalism strongly supports the overall well being of humanity.  I will spare you the details, but remind you in broad outline of the argument. 

 

Adam Smith was rightly impressed by the functioning of the village market.  Two women would not enter into an exchange unless each desired what she received more than what she gave up. Hence it seems that the exchange makes both parties better off or happier.  Economists have reasoned that the more such exchanges occur the better.

 

They also note that those who take part in the market prefer to get more for what they give rather than less.  It is only a short step from this to say that the more one is able to produce for purposes of exchange, the better, and the cheaper the goods acquired, the better.  Both increased production and cheaper prices result from labor becoming more productive, and productivity is increased chiefly by industrialization.  Hence industrialization seems to be the main contributor to the increased satisfaction of human wants.  And industry is most efficient, that is, labor is most productive, when markets are enlarged.  The globalization of the market is the ultimate ideal.  Also capitalism is the most efficient system for advancing industrialization.  Therefore, global capitalism is normative.

 

I wish that the desirability of enlarged markets and increased industrialization were taken as an hypothesis to be tested.  If that had been the case, these theories and policies would long ago have been abandoned or, at least, drastically revised.  The fact is that people in countries whose wealth has greatly increased have not become happier as their nations have grown richer.  Indeed, people in rich nations are not happier than people in poor nations.

 

If this two-century experiment in satisfying people’s wants or making them happier has dramatically failed, why is there so little reflection about its abandonment or revision?  One reason, no doubt, is that we are creatures of habit and that we can only think and act in accustomed ruts.  But by itself this does not explain the almost unanimous commitment of the world’s nations to continuing the failed experiment.  To succeed, the capitalist program had to uproot traditions and habits that had prevailed for millennia.  Clearly drastic changes have occurred in the past, and new changes are possible.

 

A second reason for lack of interest in an alternative may be that although most people in industrialized nations have not become happier, they have become attached to possessions that have come into being through the capitalist system.  Whereas these people have not been made happier by their new lifestyle, they are sure they would be made unhappier by losing it. They have no vision of how changes could occur that would make them both “poorer” and happier.

 

A third reason may be that although most people have not become happier, a few have, and these are the ones who control business, government, the educational system, and the media.  The global capitalist system has concentrated greater and greater wealth and power in a few hands.  Whereas studies show that absolute wealth does not correlate with happiness, comparative wealth contributes to status in one’s community, and people enjoy high status.  The one person in a thousand who now plays a significant role in deciding human destiny is likely to enjoy her, or, more often, his status, power, and wealth and the exercise of the skills that have led to this exalted position.

 

Let us turn now to the question of what is wrong with the reasoning that misled so many into supposing that industrialization and globalization would increase happiness. 

 

First, studies indicate that happiness is primarily a function of relations with family, neighbors, and the immediate community within which one lives.  Relative standing in that community affects happiness.  If trading well in the local market improves one’s standing, one will be happier.  No doubt absolute wealth also sometimes contributes to happiness, at least as it affects one’s health and that of one’s family. But beyond a quite modest level, it matters little.

 

Transactions in the local market can play a number of positive roles in building relationships, increasing mutual respect, and meeting real needs. But increased market activity as such makes no such contribution.  Instead, the methods used to achieve this remove the market from the village and damage relationships within the village. Often the village disappears, to be replaced by inferior communities in urban slums.  It can sometimes be argued that the slum dwellers consume more than the villagers, thus supporting this process of development.  But life in the slums is rarely, humanly speaking, an improvement over life in the village.  Slum dwellers are not likely to be as happy as the villagers.

 

I am largely persuaded by those who say that the whole development project was a mistake.  Although we should not romanticize hunting, gathering, and gardening societies, it is probable that most people in those societies were happier than most people are today.  Civilization has brought more drudgery, ugliness, and suffering to the planet than real enjoyment.  This is even more true of industrialization. A recent global study of happiness came up with truly shocking results.  It found that the happiest people in the world are the Nigerians!

 

Nevertheless, this does not mean that the solution is to go back to earlier forms of society.  There are many reasons that this is not possible.  One is that the ecologically impoverished planet could not support the population of hunters, gatherers, and gardeners that it once did, and even that population at its height was a small fraction of ours.  Industry of various sorts is essential to support our current population.  We have already noted that even people who are not very happy with the present situation dread the thought of giving up the benefits of industrial civilization.  I include myself in the number of those who would not like to give up basic modern conveniences.

 

Does this mean that we have no choice but to acquiesce in the present system?  That is not my view.  There are major alternatives that are quite within our collective ability to actualize if we are guided by the goal of enjoyment or happiness rather than by the goal of increasing market activity.  No one has contributed more to this discussion than your neighbor in Alberta, Mark Anielski, in his recent book on the economics of happiness.

 

Twenty years ago I became convinced that one major source of the commitment to policies that often do more harm than good is the way economic progress is measured.

The focus of standard measures is on market activity.  This is measured by gross product; at the national level, by gross national or domestic product.  When we divide this by the population we come out with a figure, the increase of which is supposed to correlate with the extent to which human wants are satisfied.  This is supposed to indicate the general level of satisfaction, or wellbeing, or happiness of the people in the country in question.  Hence almost every nation in the world aims to increase per capita GNP or GDP, and the success of the global economy, and of the institutions and policies that promote it, is measured in this way.

 

Mainstream economists acknowledge that this is not a direct measure of economic welfare. They usually, however, regard it as a sufficiently accurate indicator of economic well being, that they use the GNP or GDP per capita as if its increase were self evidently desirable, as, indeed, the most important goal of public policy. 

 

There is, however, little basis for this judgment and its practical outcome.  There are many respects in which these measures omit positive contributions to economic welfare and ignore what is harmful. On the one hand, there are contributions to economic production that it does not measure, such as housework.  On the other hand, there is no subtraction for what is used up or destroyed.  If a country cuts down its forests or exhausts its supplies of petroleum, this adds to GNP, but nothing is subtracted.  In wartime the GNP soars; nothing is subtracted for the destruction of cities and infrastructure, much less for the loss of human life.  If after an earthquake everything is rebuilt just as it was before, the whole cost of rebuilding is added to GNP, even though what results may be no better than the pre-earthquake condition.

 

Furthermore, and of special interest, there are “defensive” expenditures.  These are expenditures required because of the results of the activities that make for economic “growth.”  For example, industrialization necessitates urbanization.  Cities require enormous infrastructure costs. They have much more crime than rural areas. Costs for infrastructure, police, courts, lawyers, and prisons grow.  But all these costs of industrialization are added to the GNP.  Again, economic growth obviously increases waste products, and the enlarged market obviously adds to expenditures on transportation costs.  But the cost of dealing with waste and transporting goods and people is added to the GNP. 

 

In a rational system, if the extra costs involved in producing something were equal to the value of producing it, production would cease.  But ours is not a rational system.  The profits of producing go to the producer; most of the costs are paid by others.  And the way the whole transaction is counted treats both as gains.  GNP per capita is increased both by the production of desired goods and the expenditures required for the expanded market that makes this production possible. Hence even if the latter exceed the former, most policy makers would celebrate the results.

 

I worked with others to develop an index of sustainable economic welfare (ISEW).  It is very imperfect.  Nevertheless, even though it stays close to accepted economic ideas, it gives a much better picture of where we stand than do the measures now in use.  In the United States from 1956 to 1990, while the GNP nearly doubled, the ISEW grew by less than 10 percent.  If we had factored in the value of leisure, as economists in general would regard as appropriate, the ISEW would have shown a decline.  Indeed, when Redefining Progress took over this project, it developed the Genuine Progress Indicator (GPI) and found a way of including leisure.  The GPI has declined over time.

 

No doubt economists could develop far better measures of what constitutes economic well being.  Anielski has already done important work in this direction. The results are similar.  Realistic measures of human well being show that our vaunted economic progress is not increasing anything worth increasing, even in strictly economic terms. 

 

One reason that human happiness is not increased by growing GDP is, thus, that this measure omits much that contributes to economic well being and includes much that does not.  But this is by no means a full explanation. Strictly economic measures, that is, those that limit themselves to the topics discussed by economists, suggest that economic well being has been more or less static for some time.  But during the same period, there has been a decline in happiness.

 

What, then, is the condition for happiness that has been damaged?  I have already stated that the evidence indicates that the chief contribution to happiness is the quality of relationships with those with whom one has most to do, parents, siblings, other relatives, neighbors, playmates, teacher, employers, and others.  This pattern of relationships also extends beyond the human sphere to animals and plants and the landscape in general.  These relationships largely determine one’s view of oneself as an acceptable and beloved individual or as one under pressure to prove her or his worth.  All of this has to do with the quality of community.

 

I now add that I judge that second to this is the satisfaction one takes in one’s daily activities.  To a large extent this is an extension of the first point; one enjoys one’s work if it gains the approval, appreciation, and respect of others, and seems to contribute to their well being.  But there is also the matter of intrinsic enjoyment. Much of the work of artisans was intrinsically rewarding.  Today people engage in that kind of activity as hobbies or recreation.  Work on an assembly line is intrinsically boring and often stressful as well.

 

I venture a third judgment.  There is satisfaction in making one’s own decisions about what one does and does not do.  Where others are involved in the decision, there is satisfaction in feeling that one can participate in making it.  This adds to one’s sense of self-worth.  It has a lot to do with the widely held desire for “freedom.”

 

If we consider the fruits of industrialization in relation to these matters, we see that they are predominantly negative.  Rural and small town communities can be oppressive and restrictive, but in general they provide more emotional support for children and youth than do city slums or even affluent suburban living.  The frequent movement from place to place that characterizes life in industrialized countries weakens the wider range of human relationships.  It makes healthy communities more difficult to maintain.  The extreme specialization associated with industrialization degrades the intrinsic quality of work.  The capitalist system concentrates decision-making in a few hands. The great majority must adjust to the system these deciders create.

 

Obviously, there are many people in affluent, industrial societies who have interesting work and live in satisfying communities.  Much of this work and many of these communities would not be possible in pre-industrial societies.  I do not want to question that many of us have gained a great deal. But we have not found in standard economic theory and practice a recipe for making people in general happier.  Quite the contrary.

 

If local community is important for happiness, then a profound reversal of the dominant form of industrialization is needed.  Industry should be tailored to the support of such community, and the people of the community should have a determinative say with respect to the economy.  Even work in factories should be made as interesting and participatory as possible.

 

The chief argument against decentralizing production and attending to the well being of workers is that it would lead to less productivity of labor, less efficiency, higher costs, and inferior goods.  These negatives may be exaggerated, but no doubt there is some truth to this. We will not make this kind of move until we really decide that happiness is more important than the quantity or quality of the goods consumed, and that the latter is not, beyond a certain point, a significant contributor to happiness.

 

“Beyond a certain point” is important here.  A healthy local community cannot allow any of its members to be homeless, undernourished, or without education and medical care. The first requirement on its economy is to meet needs of this sort.  All will be happier when they know that the basic needs of all are met.  To what extent these needs are met by the community as a whole or primarily by family, friends, and neighbors is a matter to be worked out in a participatory way by the community.

 

With respect to these basic needs, the local community should be largely self-sufficient. It should be able to feed and clothe and house itself, and to provide education and health care for all.  This enables it to make its own decisions.  This means that the industry that provides not only clothing, but furniture, kitchenware, and electrical fixtures, as well as basic tools and implements should be local. The community should produce its own electricity as well.  Years ago, Kirkpatrick Sale estimated that something of this sort would be possible in a community or as few as ten thousand people.  Obviously, many communities would be larger.

 

Such communities, and even very large ones, could be constructed as architectural ecologies or arcologies whose energy requirements are met by the sun, along the lines proposed by Paolo Soleri. This would put an end to motor transportation within towns or cities. But in the construction of the larger arcologies there would be need for moving side walks, escalators, and elevators. Clearly not everything needed would be produced within the community.  There would be communities of communities with some of the local communities producing some of these more expensive goods, and other communities, others.

 

The goal would be that the footprint of each community (in the terms of Rees and Wackernagel) would be no greater than the area it occupies.  This goal is necessary if the well being of communities in some areas is not, in the long run at least, to be at the expense of the well being of others.  If the community is organized to meet many of the desires now met only by private possessions, and if others do not have such possessions either, there is little loss of happiness in the lack of many of these.  If no one has a car, the lack of a car need not detract from the enjoyment of life.

 

My conclusion is that orienting all our efforts to increasing GNP is totally foolish.  Not only does it not contribute to happiness.  It is radically unsustainable. Increase of market activity, which is what is now called economic growth, is closely correlated with speeding pollution and hastening the exhaustion of resources. Of course, it is possible by technological improvements to protract this process, and the resistance of the powers that be even to such moderate changes is truly pathetic and shocking.  But endless increase in market activity cannot be sustainable.  Even if everyone continues to support it, the system will collapse, perhaps sooner than we expect.

 

There will be a world after global capitalism.  The danger is that global capitalism will not collapse until much of the biosphere is irreparably damaged, many national governments have lost the power to prevent chaos in their borders, and the struggle for the remaining resources is everywhere violent.  It is too late to prevent huge losses, some of which have already occurred, but let us hope that it is not too late for the world after capitalism to be a humane and livable one.

 

If the need to abandon a global system concocted for the purpose of increasing global wealth is clear, how can the process begin? It must begin by reversing the concentration of power in the hands of a fewwhose interests are in pressing the capitalist globalization project still further.  This requires either a reversal of commitments in Washington or a forced end to its imperialist project. 

 

The American vision has been a purely top-down one.  The global economy is run by a handful of international institutions, national governments, and corporations.  Politically, the world is to be controlled from Washington.  For the most part this control will be exercised for the sake of global capitalism.  As long as this goal governs national and global policies, those who are convinced that another world is possible can work to realize that world only in local and small-scale ways always vulnerable to being crushed from above.

 

In no way do I minimize the thousands of local efforts to bring some enjoyment to the world even now, in spite of the overwhelming dominance of global capitalism.  Without these efforts there would be very little hope indeed.  With them there is a chance of developing a post-capitalist world in which the economy contributes to the true well being of people.

 

Although there is a chance, there are many obstacles and dangers that follow from continuing pursuit of the top-down American vision. I intend this lecture to be a hopeful one, but hope is foolishness if it ignores the threats to its realization.   Accordingly, before I sketch a hopeful scenario in more detail, I will simply mention some of the disasters that threaten us.

 

One imminent danger, as seen by one who believes that 9/11was engineered by members of the Bush administration, is that there will be another false flag operation.  This time the attack upon the American people would be blamed on Iran and result in greatly expand war.  Bush has already published a paper that declares that in a major national emergency, the president will take full control of the government.  He might then cancel elections, initiate a draft, and plunge the world into war.  I will not speculate about the renewed danger of a nuclear war.

 

Another disturbing possibility is that the corporate world, with help from the dominant nations, may increase its strangle hold on the global economy, destroying all resistance, and exploiting all the world’s resources.  This program may continue long enough that when it collapses, the Earth will be unable to support more that a fraction of its present population.  

 

Still another possibility is that the catastrophic consequences of global warming will come on us soon.  For example, the shortage of petroleum could lead to the increased use of coal, which could vastly increase pollution and hasten global warming.  As large areas of the earth’s surface become increasingly inhospitable, people everywhere will lash out in terror and violence and vast movements of population seeking food and water will destroy the possibility of orderly life anywhere.

 

Alternately, in anticipation of the shortage of petroleum and to avoid excessive contributions to global warming, nations may turn increasingly to atomic power.  Accidents for worse than anything seen this far could occur or terrorists could cause massive malfunctions.  Also, those now without nuclear weapons may acquire them.  Either American imperial ambition or defense against it could lead to nuclear war.  So could the desperate need of a nation affected by global warming for scarce resources.

 

Or, in the absence of any alternative vision, fearful people will look to authoritarian leaders to maintain order and security at whatever price in individual freedom. 

 

A hopeful future requires, as a first step, the overthrow of the top-down American vision of the world.  This vision can be changed only by a profound conversion occurring among the leaders of the United States, or by actual changes in the global power structure.  I do not deny the possibility of conversion.  Miracles of this sort do happen in human history.  But I think that changes in American strategies are more likely to follow from changes in the global situation than from personal conversions antecedent to such changes.  Hence, in my hopeful account of moving toward another world in which the goal will be enjoyment rather than exploitative wealth, I turn to possible scenarios of global changes that are beginning to occur now.

 

The most promising move away from the global hegemony of the United States has been in South America.  There, step by step, the masses of people have recognized that the global economy as shaped by the United States has been profoundly costly to them.  In Argentina it led to financial collapse, and the Argentineans are no longer willing to be governed by the United States through the International Monetary Fund.  In Brazil an opponent of economic bondage to the global institutions and the United States has become president, and with great care and moderation is charting an independent course. 

 

Meanwhile the common people of Venezuela and Bolivia have finally found leaders who have succeeded in using the democratic processes to take control of their governments and to develop economic policies for the benefit of the people rather than transnational corporations.  Thus far the efforts of the United States to overthrow these leaders, as it has overthrown so many populist leaders in the past, have failed.  In short Latin America is no longer part of the American empire as it has been for centuries.

 

In general, U. S. control of Latin America over the centuries has been a combination of economic and military policies.  Military intervention has sometimes been through local military forces and sometimes directly by U.S. marines.  This intervention has been supplemented by subversion and assassination.  The road to independence has, therefore, been particularly difficult.  If South American nations can overcome these obstacles, this should be possible in parts of the world where domination has thus far been chiefly economic, with much less threat of overt military intervention. 

 

There is some promise of improvement here.  The subject of unpayable debts as obstacles to economic development is now widely discussed.  However, the “forgiveness” of debts of the poorest countries, now being touted by the World Bank and the International Monetary Fund, is based on conditions that enslave the nation further.  There is no promise in that.  But in a context in which the problems of indebtedness are acknowledged, subject nations might engage in fresh analysis and act upon it. 

 

The bondage of nations to the global system through structural adjustment was originally justified by their difficulty in making payments on their debts.  Instead of solving this problem, it has led to increased indebtedness and thereby increased control of the economies of these nations by international agencies and transnational corporations.  It is time to re-think the whole system.

 

We know from such sources as Perkins’ Confessions of an Economic Hit Man that this relation of indebtedness and enslavement was not accidental or incidental. Perkins’ job beginning soon after World War II was to persuade nations that hoped to “develop” to borrow large sums of money.  Much of the persuasion consisted in arousing false expectations as to the profits to be made from investing the proffered loans.  His task, and of course the task of others like him, was to create a situation of permanent and growing indebtedness, and in this they were quite successful.

 

One of the first steps toward the liberation of nations would be a careful analysis of their part of the debts that are “odious.”  A nation is not required to repay “odious” debts. These include debts that were illegally acquired.  The term should be extended to those where lenders practiced systematic deceit, or at least to an appropriate percentage of those debts. In many cases, once such percentages are calculated, it is clear that the debts were long since paid, and the further debts required in order to continue to make payments are also odious. The repudiation of odious debts would be an act of independence by the debtor nations that could greatly decrease the power of the World Bank and the International Monetary Fund to shape their economies for the sake of greater profits and power for transnational corporations. 

 

Debtor nations are fearful of repudiating debts because of the consequences that the masters of the global economy could inflict upon them. However, if as many as a dozen nations worked in concert, the ability of these masters to punish would be greatly reduced.  Every declaration of independence such as those of Venezuela and Bolivia can increase the likelihood that economically enslaved nations will begin to act in their own interest.

 

If we consider the enjoyment of life by human beings as more important than the increase of market activity as such, we will do what we can to end the push for breaking down what are called “barriers to trade and investment.”  Nations that break free from external economic control will be able to determine how much and what kind of investment they want from outside, what to trade, and on what terms.  If a nation wants to have its own industries, even if these are not as efficient as industries in another country, the nation will be free to act in that way.  There is at least as much value in national self-sufficiency as in increasing global gross product.  If a nation wants to protect its forests or its fisheries from exploitation by transnational companies, it will be free to do so.  If it wishes to provide basic healthcare and education to all its citizens it will be free to do that.  If it wants to control its own supplies of water, it will be free to do that.

 

There is, of course, no guarantee that nations that can organize their economies for the benefit of their people will do so.  The point is that they can, whereas under the heel of outsiders they are forced to order their economies to the profit of these outsiders.  The possibility is an important gain.

 

There are other promising changes in the global system.  The intransigence of the United States has in recent years, for the first time since World War II, led to international treaties being ratified without the participation of the United States.  Our nation has lost its moral leadership.  Military power is far less potent, when moral leadership is gone.

 

We may be grateful to the administration of George W. Bush for having carried this loss of moral leadership still further.  It has fully unmasked the imperial ambitions of the United States.  This has led to movements around the world, and especially in Asia, to organize counterweights to American power.  China and Russia are uniting and drawing other countries into their orbit. American policy is driving Iran into their arms.  As the United States’ control of its Latin American empire fades and it confronts a powerful counterforce in Asia, the days of its global hegemony are numbered.  In the long run it is possible that Europe will seek a more neutral position between the United States and this new Asian power. 

 

The Democratic recovery of dominance in the U.S. Congress may have been made possible by popular weariness with the Iraq War, but it is clear that the real power lies in the hands, not of the populist anti-war movement, but of those who are angry with Bush for setting back the American imperialist program. Under either a Republican or a Democratic administration, I assume that the “realists” will regain control of foreign policy.  Their goal will be to undo the damage inflicted by the Bush administration on the imperialist project they share with the neo-conservatives.  The realists will, no doubt, reduce U.S. involvement in the Iraqi civil war, so as to moderate popular opposition to American involvement there.  But they will not reduce efforts to control Iraqi oil and to maintain military bases in Iraq.  I trust that neither Latin Americans nor Asians will be deceived by better-mannered and better-spoken diplomats. 

 

There is an advantage in control by “realists” instead of ideologues.  If their efforts to get the American imperialist project back on track fail, as I have indicated they may, these realists may reassess the situation and its possibilities. Perhaps in the end true realists will recognize that the goal of global hegemony is unrealistic and guide the United States toward a more modest role in international affairs.

 

Let us suppose that liberation from the global capitalist system and resistance to American imperialism leads to a world of large regional blocks within which nations have recovered a good deal of the power of self-government.  Perhaps Latin America, or at least South America, will be one such block and much of Asia, led by China, another. Of course, Europe is already such a block, and it may establish itself in a position more fully independent of the United States.  There is a chance that these blocks would aim more at economic self-sufficiency than at victory in global competition.  The coming oil crisis will tend to push them in this direction.  Perhaps if African nations regain more control over their economies, the Organization of African States can become an effective force in the world.  Perhaps the Arab world of the Near East can do so as well.

 

The energy crisis will press further in the direction of decentralization.  Even within the blocks, it will make transportation more expensive, and this will tend to give respectability to ideals of greater local self-sufficiency.  Regions deficient in petroleum may lead the way in the use of solar power, a source of energy that lends itself best to local collection and use.  Models of local communities that now seem only amusing and fanciful may suddenly be recognize as pragmatic necessities. If they can also be recognized as opportunities for the increase of enjoyment, this process may be speeded.

 

Probably the actual course of events will be far more varied, confused, and unpredictable than any of these negative or positive scenarios. And, even if the most positive were realized, we should not suppose that drastic decentralization of the economy automatically leads to utopia. Local communities can fall into the hands of local bosses or gangs.  Popular local governments can be destructive of minorities and hostile toward neighbors.  Even reasonably good communities can be oppressive and restrictive.  It is quite possible to spell out ideals for such communities, but in the real world, even under the best circumstances, they would rarely be fully realized.  Unfortunately, the circumstances under which a post-global capitalist society may emerge are very unlikely to be favorable.

 

Nevertheless, it is important for people of good will to have a confident sense of direction, to know what developments to oppose, what to support.  We need to know that sustainable local communities are possible in principle, that in them enjoyable life is possible, and that some current trends have the potential of actualizing possibilities of these kinds.. We are called to support these trends even when they do not seem to be in our current interest.  To those who are in despair about the future of the planet, we can offer some realistic hope.  That is something – a good deal more than is commonly available. 

Who Was Jesus? (Colossians 1:19)

To be a Christian is to hold Jesus in highest esteem. Even more important, it is to live as Jesus’ follower and as one who believes that in following Jesus one is also serving God. According to the synoptic gospels, people in his day, marveling at his words and deeds, called him "Lord." The great question then was whether he was the expected one, the Messiah, or, in Greek, the Christ.

For his disciples, the resurrection appearances of Jesus settled these questions. Jesus was definitely Lord, and definitely Messiah or Christ. Although much that was expected of the Messiah had not happened, the title Christ almost became part of Jesus’ name or a virtual synonym. Jesus’ was God’s beloved son, chosen by God for the salvation of all who followed him.

Paul developed these ideas. As was expected of the Messiah, Jesus was a descendant of David, and through his resurrection he came to be, or to be recognized as, the Son of God. Jesus fulfilled God’s mission by opening the doors of salvation to all, including the Gentiles. Jews had been seeking salvation by obedience to the law, but this did not work. By his faithfulness to God even to death Jesus provided another way. Jews and Gentiles alike could participate in that faithfulness. This meant that they would suffer and die with Jesus. God accepts that participation as righteousness. Those who thus participated are reconciled with God and will also participate in Jesus’ resurrection.

This is truly an exalted picture of who Jesus was and is and of Jesus’ work for God and on our behalf. There is a heavenly dimension in that the resurrected Jesus is no longer an earthly figure but a heavenly one. But Jesus remains unquestionably a human being. "Messiah,’ "Son of God," "Lord," and "Savior" are all human titles. The resurrected Jesus is the first fruit of the transformation in which we are all to participate.

There is no suggestion that Jesus belongs in another realm as a divine being alongside God the Father. The thinking of Paul remains in the fully monotheistic tradition of Judaism.

Now in Colossians we are confronted with a very different picture. A generation has passed, and the Rubicon has been crossed. The faithful are now predominantly Gentile. Paul is the great leader, virtually the founder, of the Gentile church, and believers are eager to claim his authority for what they say. But their ways of thinking are no longer Jewish. The sharp distinction between the one Creator and the many creatures has faded. Jesus is the primary focus of their thought. He, not the emperor who claims their worship, functions as their God.

They still affirm the God whom Jesus addressed as Father. But the emphasis is now on the intimate, indeed insoluble, relation between Jesus and God. All things on heaven and earth have been created through Jesus and for Jesus. "In him all things hold together."

To Jews of that time and to us today, it is impossible to think that a person inhabiting a human body could function in these cosmic ways. Probably that was never quite the intention. "Jesus" had come to name not only the human figure about whom we read in the synoptic gospels but also a divine being who temporarily inhabited a human body and in that role died on a cross for our sake. But there is less clarity in this Colossians passage about this distinction than in the prologue of John where it is clear that the everlasting Word of God became a human being in Jesus. There is no preexisting divine Jesus.

Even John is not as clear as it might be about the distinction between the human being Jesus and the Word that became flesh in him. The creeds likewise blur this distinction to the great detriment of Christian faith. Jews could see God’s Power, God’s Spirit, or God’s Wisdom manifest in a human being. Paul affirmed this of Jesus. If we believe, as I strongly do, that something of God is present in all God’s creatures, there is certainly no problem in emphasizing the rich and full way, certainly distinctive and possibly unique, in which God was present in Jesus. But we need to retain the distinction between the divine that was incarnate in Jesus and the human being who was partly constituted by that incarnation. In Paul the distinction is generally clear. In Colossians it is badly blurred.

The great danger of this blurring is that Jesus’ humanity be lost. Jesus became for many Christians a God walking around in human form. Fortunately, there were many Christians who resisted this loss. Antioch was a great center of the ancient church and of its teaching. There they clung to such formulations as that of the divine indwelling a human being. This is far more intelligible, far more faithful to Paul, and far healthier for the church. And throughout the whole controversy in the ancient church about the nature of Jesus it prevented the obliteration of Jesus’ humanity.

But those who in fact worshipped Jesus insisted that Jesus was not only the human being indwelt by God but also God. And over the centuries this confused and confusing idea has played havoc with Christian teaching. Jesus’ humanity has too often been swallowed up in Jesus’ deity.

If this had not happened, Jews would not have been so profoundly alienated from Christianity. There would have remained the dispute as to whether salvation comes through obedience to law or participation in the faithfulness of Jesus, but this could have continued as a debate that might prove fruitful for both parties. Christians had no business asking Jews to compromise their monotheism. Mohammed, who had the highest appreciation for Jesus as the greatest of God’s prophets before the revelation of the Qu’ran, might well have become a Christian. At least the mutual enmity of Christians and Muslims would have been greatly eased. Perhaps both Jews and Muslims might have learned from Christians to understand more fully God’s sacramental or incarnational presence in the world.

But all of this is what might have been. What has in fact been is that neither Jews nor Muslims could appreciate a Christianity that compromised God’s unity, even if it claimed that its teaching of three divine persons did not do so. What has in fact been is that many have been alienated by a teaching that places believing very doubtful ideas about Jesus over following him in humble service even when that entails sharing in his suffering.

For several centuries now Christians, especially Protestants, have been engaged in rescuing the human Jesus from his de-humanization by the church. Unfortunately, like many needed reactions, it has often gone too far. Humanizing Jesus has often meant reinventing him in the image of contemporary ideals, on the one hand, or in a negative light, on the other. Almost always it has separated him from "the Father" whose presence his followers saw in him.

Jesus is not alone in being subjected to this treatment. It seems to be important for us to bring the most admirable people down to our size. I believe that there are human beings who are truly remarkable in diverse ways and that humanizing them should expand our image of humanity rather than reduce them to fit a small one. I believe that we can and should say things about the fully human Jesus that we say of no one else. Being unique does not make one less human.

For that reason, despite my heavy critique of the confusion of deity and humanity that I find in this passage in Colossians, I also find much to appreciate. I have taken as my text verse 19: "in him the fullness of God was pleased to dwell." In my view the more fully God dwells within us the more fully we are human. Precisely because God dwelt so fully in Jesus, Jesus shows us what humanity in its fullness can be.

Our recognition of God’s presence in Jesus is also our assurance that God is like Jesus. Far from condemning us for our sins and failures, God loves and forgives. In the language especially emphasized in this passage we are reconciled to God. If we participate in Jesus’ faithfulness, there is nothing left for us to do.

We can come to God with the assurance that we are already fully known and accepted as we are and therefore can open ourselves in responsiveness to God’s inward call. In Jesus we learn that while we are secure in our relation to God, following our calling is not a path of safety in human terms. There is no assurance that our ventures in service of the weak and the poor will succeed, but there is assurance that God affirms them and uses them beyond our knowledge. God used even Jesus’ death for our salvation.

The author of Colossians expressed his devotion to Jesus in language some of which proved harmful in later centuries and in different contexts. We can learn from that to be careful that our formulations of our devotion not put others down. But we need equally to know that it is not the strength of our devotion that is dangerous to others, but only its mis-description and misunderstanding. We need to find in our time and for ourselves the way to express no less devotion, ourselves now, than the author of Colossians expressed in his time and place.

Religion and Economics

            In this lecture I am using “religion” in a somewhat broader way than is usual.  I understand “religion” in its root meaning of binding up.  A religion is a system of beliefs and practices that commands personal and social devotion.  The word is most often used for the great universal systems that arose two and a half millennia ago to supersede the local religions of the earlier epoch.  Most of us in the United States have been influenced chiefly by the monotheistic Abrahamic faiths: Judaism, Christianity, and Islam.  But religions that arose in India and China are now also influential in this country. 

            On the whole these traditions have lost the ability to organize the whole of individual and social life in the modern period.  New religious systems have arisen.  When I was growing up the most powerful claimants to ultimate devotion were Nazism, Fascism, and Japanese emperor worship.  The major competitor was Communism, which, like the traditional religions, undertook to deal with the human condition universally.  Unlike the traditional religions, however, it focused its attention on economic theory and practice.  I call it a form of economism.  Opposing all of these was a combination of traditional religion, less virulent forms of nationalism, and democratic feeling.  This opposition, in alliance with the Communist Soviet Union won World War II, and the clearly religious forms of nationalism largely disappeared from the global competition.  Of course, nationalism remains an important force in the world, and it is always religiously tinged. 

            The victors soon divided.  The Soviet Union promoted throughout the world a deeply religious form of Communism.  To oppose this, the Western allies promoted “freedom,” describing themselves as leaders of the “free” world.  “Free” was used to point to democracy, but especially because of the economistic character of Communism, it came equally, and now even more, to refer to individual economic freedom and the freedom of the market from governments. 

            Theoreticians showed that with this freedom the economy could grow faster.  Because Communists also favored economic growth, this goal came to be accepted by the two great competing movements.  In the West as in the Soviet Union, economic considerations became dominant in national and international affairs, and it was taken for granted that the goal of national and international activity was economic growth.  Not only the economy, but the whole of society, was reordered in the service of economic growth.  A new form of economism as a religion came into being.

            In the struggle between these two forms of economism, the West was victorious.  The Communist form of economism has been marginalized.  The Western form has become the first truly global religion the world has seen.  Almost all leaders of almost all countries are faithful practitioners, or at least claim to be.  It is a “theistic” religion in the sense that it has an object of devotion, although this is not personal.  In this case, “god” is economic growth.  Popular participation in this religion is called “consumerism.” 

            The theologians of this global religion teach in the graduate departments of economics in our universities.  Their theologies differ a little.  For example, some have thought that economic policy could serve its god best by stimulating demand.  Others have said it is better to stimulate supply.  But they all serve the same god.  Any student of economics who does not serve that god is excommunicated. 

            Demand-side economics has a considerable role for government.  Its policies can provide more services for the general public and even put more money in the hands of the poor.  However, during the past few decades the dominant theology has been neo-liberalism.  Neo-liberalism supports supply-side economics.  This means that government should not try to redistribute wealth but rather allow it to accumulate in the hands of those who can invest in productive enterprises.  It discourages any governmental efforts to restrict the freedom of investors and managers.  It emphasizes the superiority of the market over government management and hence calls for the privatization of as much economic activity as possible. 

            Since neo-liberal theoreticians consistently support policies that benefit the rich, it is not surprising that neo-liberalism has received a great deal of support from them.  There are now many think-tanks, journals, and magazines devoted to its advocacy.  There are well-funded faculty positions and many opportunities for profitable consultation.  There are also many well-paid positions in business and in governmental agencies.

            Since the election of Ronald Reagan in 1980, neo-liberal economics has shaped not only the global economy but also the global society.  Prior to that time, the world’s economy was primarily based on national economies that traded with one another.  The goal was an international economy partly regulated by the International Monetary Fund and the World Bank.  Since that time the goal has been to make the whole world a single market with national boundaries no more a factor in economic affairs than the boundaries between the states are in the United States.  Aid to poor countries can then be replaced by investment, which is attracted by cheap and docile labor and low environmental standards.  Although the ideal of complete disempowerment of national governments over their national economies has not been fully realized, the extent to which we now have   a truly global economy is remarkable.   No previous religion has gone so far toward realizing its goals.  And all this has occurred in thirty years.

            Of course, this religion meets resistance.  Part of this resistance comes not to the teachings of the religion or to policies that genuinely express it, but to policies that one-sidedly push reforms on poorer nations while refusing similar reforms in the richer and more powerful ones.  The hypocritical practices of the rich nations have led to a backlash that has ended the series of trade agreements that progressively broke down national boundaries, especially in the south.  The backlash has brought about a new spirit of independence in South America. 

            Economism looks to growth for salvation.  “Salvation” here is from poverty and all the ills that accompany it.  When it is pointed out that its god, or economic growth, has not in fact done much toward reducing poverty, we are told that we must be more faithful to the precepts of this religion.  We must give up the ideals and values that stand in the way of total obedience.  For example we must give up any commitment to cultural traditions that leads to resistance to the new religion.  We must give up concerns for justice or equality.  We must turn away from sentimental concern for current suffering.  And we must be patient.  If we are faithful and observe orthodox teaching without questioning it, bye and bye salvation will come.

                                    II. Economism and Traditional Religions

            Previous religions have often claimed to be based on experience or on cumulative human wisdom or on divine revelation.  This one claims to be based on science.  Indeed, it aims to be a deductive science drawing its conclusions from a limited number of assumptions.  It aims, thus, not to depend on empirical or historical information.  If the policies it advocates do not obtain the expected results, this must be because they have not been fully and purely carried out.

            Communism directly challenged all other religions.  When in power it persecuted them.  Neo-liberal economism is more like Roman imperial religion than like Buddhism or Islam.  The worshipers of economic growth guided by this theology are tolerant of other religious traditions as long as they give up any claim to binding everything together.  They can then retain a role in the private sphere.  Neo-liberal economism allows diversity of music and dance, the worship of traditional gods and spiritual practices, assuming that they are all compatible with commitment to economic growth.

            The extent to which this assumption seems justified by recent history is quite remarkable.  Whereas in its Communist form, economism aroused massive opposition from the traditional religions, in its neo-liberal form, it has not.  This form of economism developed in Christian countries, but it has caught on in Hindu India, in Buddhist Thailand and Japan, and in countries influenced by Confucianism as well.  It has met with very little resistance from Christianity, Hinduism, Buddhism, or Confucianism.  There has been some resistance from Islam, but how much of this is religiously motivated is hard to say.

            Given the sharp opposition of the doctrines of economism to those of traditional religions on many points, this quick acquiescence is surprising.  For example, the traditional religions have been hostile toward taking interest on loans, at least in the case of lending to the poor.  In the now victorious form of economism, interest-bearing debt has become the basic form of money.  Only in Islam is there resistance. 

            More fundamentally, the traditional religions have regarded greed as a major sin.  Economism in its currently dominant form teaches instead that rational self-interest oriented to unlimited gain characterizes, and should characterize, everyone. 

            The point is not that traditional religions ever suppressed the pursuit of personal gain.  There were rich people in all “civilized” societies who had great power and ground the face of the poor – to use biblical language.  The church itself accumulated, and sometimes flaunted, wealth in European Christendom.  If there had not been a great deal of pursuit of riches throughout history, there would not be so much teaching against it. 

            Nevertheless, those who were most admired in Christendom were the saints, most of whom led lives of voluntary poverty.  Today, in countries such as the United States, even through the majority of people consider themselves Christian, it is “the rich and famous” who are most admired and emulated.

            Of course, it would be an exaggeration to think that traditional religious values, such as justice and charity for the poor, have completely lost their hold.  Although these values are assigned no role in economism, most cultures still want to relieve the suffering brought about by the dominance of economism, and for the most part government is assigned some role in this respect.  In Europe and Japan, the role of government in these respects after World War II was quite large.  We speak of social democracies, in which the fruits of growth were spread among the people as a whole. 

            In the United States, economic action was never as restricted as in Europe, but concerns for justice did, for a while support labor in organizing, and organized labor did share in the fruits of economic growth.  Also, the government was expected to provide a safety net for those who were unsuccessful in competition in the market economy, which is touted by economism as the salvific force.  It is ironic that the Republican Party, which has embraced the new religion of economism with fewer qualifications and reservations, is widely viewed as the more “conservative” and “Christian.”  Traditional religious values, such as justice and charity, are now viewed as liberal and secular.

            We must ask why traditional religions have offered so little resistance to the trans-valuation of values that has shaped our world.  The history is complex, but I will single out just one factor:  industrialization.  All of the traditional religions came into existence and shaped their teachings before the industrial revolution. 

            Throughout millennia there had been some increase in the productivity of labor.  That is, people have harnessed the power of wind and water as well as animals, and they had improved technologies and the organization of productive enterprises, in such a way that a given amount of human labor could produce more goods and services.  However, changes in this respect were small and gradual.  They did not enter into thinking about economics.  Instead, this thinking was based on the assumption that the total production of a given population was relatively static.  If one person appropriated more, others would have less.

            Medieval Christians did not argue for equality in distribution, but they did seek some kind of proportionality.  To seek more than one’s fair share was to deny a fair share to others.  Greed, accordingly, was a mortal sin.  Religious teachers talked about just prices that would reward the makers of things appropriately without gouging the purchaser.  They recognized the existence of distinct social and economic classes, and they tried to assure that those with the power to oppress did not render the poor destitute.  Of course, there were enormous injustices in Medieval Christendom.  But ethical teaching also had some effect.   Ambition for admiration led in other directions than accumulating wealth.

            Although the renunciation of wealth and the embrace of voluntary poverty were highly admired and were required of Christian professionals, no one favored involuntary poverty of the extreme sort, which yet remained widespread.  All religious teachers would have preferred to meet basic human needs more generously.   They simply did not think this was possible.

            The industrial revolution abruptly showed that human labor could become much more productive.  By applying fossil fuel energy, new machines, and new forms of organization to production, far more goods could be produced by a given work force.  This seemed to mean that, in principle, there could be enough goods to satisfy the needs, and many of the desires, of all.  It was hardly possible for morally sensitive people to oppose this new development in human history. 

            The only question was how to employ this new discovery.   Speaking in very general terms, it has seemed to those who have considered this question that there were two possibilities.  Industrialization could be effected by the people, acting for the most part through governments, or it could be left to the private sector.  The former system is socialism, the latter, capitalism.  Traditional religious and cultural values generally supported the former, but the great original success was by capitalism, and over the years, it has proved more effective in achieving growth.  Although many Christians favored socialism, the success of capitalism led most to accept it.

            Since its capitulation to capitalism, Christian ethics has had a muted and often confused voice.  It continues to oppose “greed,” but it now redefines it so as to make this opposition refer only to excessive subjective attachment to wealth that may do the greedy person inner, spiritual harm.  It no longer discourages those practices and policies that lead to gaining increasing wealth and even an increasing share of the wealth.

            It is greed in the latter sense that makes capitalism work.  Christians dare not condemn that.  Their ethical teachings are largely limited to calling the public to be concerned for those who suffer want or are treated with special brutality.  Only a few critique the system as a whole and in general.  Industrialization has raised the standard of living of the great majority of people in “advanced” societies, and most assume that it can do the same for those in undeveloped and developing societies.  And, again, the most successful form of industrialization has been through capitalism.

            The other side of economism is consumerism.  Industry can continue to produce goods only if there is a demand.  Demand depends not on need but on the ability and desire to buy.  This buying requires that even people who have enough for a comfortable life, still desire and pay for more.  The theory is that as they do so, the factories employ more people and that the number of the really poor declines.  Growth is pictured as a rising tide that lifts all ships, the yachts and the rowboats alike.  This means that the desire for more and more possessions is to be encouraged.  This is deeply contrary to the traditional virtue of frugality.  But given a system in which unemployment and poverty can be reduced only by the continual acquisition of goods by those who do not need them, how can traditional religious thinkers object?

                        III.   Responses to the Financial and Ecological Crises

            Today the situation has changed, and there may be a new role for traditional religion.  Two crises have forced themselves on public attention.  The financial institutions overreached in their gambling and the greatest bubble the world has seen has now collapsed.  Meanwhile the concerns of ecologists about the effects of economic growth on the environment came to a head on the subject of weather- change and its consequences.  Both of these crises raise serious questions about the neo-liberal theories that have governed the efforts to serve the god of economism.

            However, a powerful religion into which many people have been deeply socialized does not collapse when a challenge arises to its god.  Many problems have been pointed out with traditional beliefs about the Abrahamic God, but Judaism, Christianity, and Islam still flourish, sometimes with changed views of God, sometimes dogmatically holding on to what has been discredited.  Similarly, the leaders of the world, even if their policies may be changing, are still worshippers of economic growth, and the world’s people are still devoted to consumerism. 

            We will consider the financial collapse first.  The religion of economic growth was originally focused on the growth of production.  But the desires of the rich for growth outgrew the capacity of the real economy to satisfy.  The great centers of finance got the governments of the world to make available to them, by privatization, all of their possessions.  But still this did not suffice. 

            How could growth continue when there was nothing more to buy in the real world?  The answer was derivatives.  The best and brightest graduates of our business schools invented a way of expanding the virtual economy almost infinitely without regard for growth of the real economy.  The virtual economy increased to something like five times the value of the real economy.  The paper or electronic wealth of the world thus became wholly disproportionate to its actual wealth.  We have seen the logical and actual consequence of the worship of economic growth carried thus to an absurd extreme.  The drop in the price of stocks around the world alone wiped out 40% of this virtual wealth.

            This is recognized as an unprecedented event that shows that something very serious went wrong.  However the dominant response is to try to get the economy, including the financial “industry” “back on track,” that is, back on the track we were on.  The sums we are expending for this purpose are disproportionate to any sums every spent before.  We are throwing many trillions of dollars at this effort.  There is little dispute about the need for these huge expenditures.  There are, however, major disputes as to how the money should be expended. 

            There is another debate.  Many worshippers of growth now admit that their insistence on an unregulated financial system contributed to the debacle.  They are ready for new governmental restrictions and controls.  A few even acknowledge that in exchange for its huge investments the government might acquire ownership of some financial institutions, at least temporarily.  These are major adjustments of neo-liberal thinking; so other economists strongly oppose these heresies.   There may or may not be a major shift of theory as to how to renew economic growth in the field of finance, but there is no public discussion of the object to which all remain committed:  economic growth.

            For some time now environmentalists have been calling attention to the way the growing economy is straining the limits of the environment to supply our needs.  Two of their arguments now function in important ways in the public debate.  One of these is the fact that our economy is powered primarily by oil and that this oil will soon be scarce in relation to the growing demand.  The second is that our industrialized economy is responsible for changes in the chemical composition of the atmosphere.  It is generally recognized that the results may be very negative. 

            Standard economic teaching assures us that we should not be concerned about the exhaustion of particular natural resources.  As they become scarce, prices rise.  The rise of prices causes users to find ways of accomplishing more with less.  Also less accessible supplies, and others of lower quality are exploited.  Further, alternative sources are developed to meet the need.  In short the magic of the market will take care of the problem.  In the case of oil, technology will find new sources of energy as oil becomes scarce.  

            Unquestionably, this general pattern has worked well in many cases in the past.  But today technologists warn us that the scale of the problem will probably render market-oriented solutions inadequate.  Economists in general have more faith in technologists than technologists have in their ability to meet the expectations of the economists.  Governments have decided that they need to push markets to do their work before the price signals become effective. 

            The challenge to technology to solve the problem of sufficient energy to power continuing increase of economic activity is complicated by the heightened concern to reduce pollution and especially to avoid disastrous changes in weather.  There is renewed interest in atomic energy, but there is resistance to this because of the long-term risks associated with it.  Cars can be powered by electricity and thus emit far less pollution, but the production of this electricity is almost always polluting or otherwise environmentally destructive.

            The recognition that economic growth has caused natural disasters and is leading toward far more catastrophic ones has had a different kind of effect.  The more enlightened worshippers of growth are now emphasizing the need to modify their understanding of growth.  In standard economistic teaching, one kind of growth is as good as another.   For this reason, until recently the worshippers of growth took no account of its negative consequences.  They have measured growth primarily in terms of market activity and government expenditures.  These are typically increased by such things as wars and earthquakes.  These costs are added to the gross national product, whereas the losses due to destruction are not subtracted.  Similarly the losses caused by changes in weather are not factored in negatively, while extra costs involved in responding to these changes are considered as contributions to growth. 

            There is still little interest in changing the way growth is measured, but many of our leaders have now recognized that the pollution caused by industrial development threatens the human future.  Although some economists still resist any serious change, most politicians now recognize that growth must be in less polluting forms, that, indeed, even the present level of pollution is unsustainable.  In other words, the economic growth that they find worthy of their continuing devotion and commitment is less polluting growth.

            Any major change in the understanding of the god we humans truly serve is of major historical importance, and this change is beginning to have some effect on what is happening in our world.   However, there are serious question, just beginning to be heard, as to whether this change will suffice to save us from the disastrous consequences of our long service of economic growth in general.  The change of weather patterns is only one of these consequences, but it alone may be more than human society can handle without collapse.  The reduction of the rate of increase of pollution that is following from this modification of the established religion is unlikely to avoid disaster. 

            We can see that while there are debates about how best to serve the god of economism, there has thus far been no serious public or political debate about this religion as a whole.  Nevertheless, at the margins questions are being raised.  And during an obvious crisis there is some chance that more radical proposals can be heard.   Does the god of economism deserve to be held sacrosanct, above any rational criticism?    Is the proper goal now to get our financial system back on track?  Must we pour our energies into the continued growth of the productive economy even when we know that this makes very difficult, if not impossible, avoidance of truly terrible disasters?

            When Christians accepted economic growth, and all that was required to produce it, as the desirable goal, the reason was that it would benefit people in general and the poor in particular.   Growth is still needed in some places to provide truly needed goods and services.  But surely the real goal should not be growth as such but human wellbeing.  If improving the human condition is the reason for affirming growth, would it not be better to let that be our aim?  Economists would still have a role in guiding us in that direction, but insofar as their self-designated task is teaching us how to make the economy grow, they would no longer be our theologians.  Their contribution would be integrated with that of historians and philosophers, psychologists and sociologists, and even the theologians of traditional religions.   

            Today, as we are learning that the separation of human beings from the rest of the world is wrongheaded and disastrous, as we are beginning to affirm such things as the “rights of nature,” we should expand our goal.  It should be the wellbeing of the world.  It is the world as a whole that we should serve.  And that cannot mean only its present wellbeing; it must include also its wellbeing in the future, that is, its sustainable wellbeing.  For some, “Gaia” can be the way in which to name this god.

            A shift from the service of economic growth to the service of Gaia, with a special concern for its human inhabitants, would have enormous practical consequences.  It would require serious thought and research about what makes for authentic human wellbeing.  The relation between this and economic growth is far less direct or clear than we have supposed for two hundred years.  Sometimes economic growth occurs in tandem with increased human wellbeing.  Sometimes, as in the past half century, growth accompanies a decline in human wellbeing, at least in the United States.  A recent study of human happiness concluded that the Nigerians are the world’s happiest people despite their poverty. 

            At present there is just one country that declares itself directed toward the happiness of its people rather than their wealth.  That is the Buddhist Kingdom of Bhutan.  But surely that is a more rational object of devotion.  If growth does not make us happier, why make its production out national goal?  We now know, or should know, that the worship of growth makes terrible ecological disasters inevitable.  The promise that patient faithfulness in the service of that god will be rewarded by universal prosperity is empty.  And now we know also that prosperity as measured by the quantity of consumption has very little to do with happiness or wellbeing.

            What then does contribute to wellbeing and happiness?  Certainly there are basic physical needs to be met by the economy.  But beyond that, the quality of community appears to be vastly more important than the quantity of goods.  Feeling secure in the esteem of one’s fellows, having a respected role to play in one’s community, loving and being loved – these are the major contributors to human wellbeing.  Having interesting work that is a little challenging through which one can express one’s creativity is also important.  Probably the relationship to a beloved and healthy natural context also contributes more than worldly goods that are not really needed.  A society could provide all these contributions to human wellbeing at very little cost to the natural environment.  Regeneration of a healthy biosphere would be both possible for its own sake and for the sake of its human inhabitants.  A truly good society could be a sustainable one.

            Unfortunately, those we consider our progressive and ecologically-concerned leaders are still worshipping the wrong god.  They are trying to renew economic growth by restoring the financial industry and by finding new sources of energy.  These efforts will postpone consideration of the radical alternatives that alone might now save us.  Whether there is time to move to a society designed for the wellbeing of all its inhabitants we do not know.  Perhaps we have already passed the line of no return in the destruction of our environment.  It is hard to be optimistic.  Still it is important to begin to worship the true God and to refuse to despair.

            I have proposed that a shift of devotion from economic growth to Gaia would be a great gain.  But I should tell you honestly that I do not myself worship Gaia.  I mention it because the reality of the Earth and the importance of its wellbeing for us are so obvious that there may be a chance of moving tough-minded people in that direction. 

            For myself, I continue to worship the one whom Jesus called “Abba” or “Papa.”  Since I called my father by the name “Papa” I like that translation.  “Abba” and “Papa” are ways of rendering sounds that babies make early in life.  That Jesus used that name to address God indicates to me that he did not think of God as the omnipotent lord of hosts.  The central element in God and our relationship to God is love.  God loves all the creatures, and especially all people.  God excludes no one.  Despite all the evil in the world, the evil for example of worshipping economic growth instead of God, God does not condemn.  Those who worship God are called to share in the spirit of forgiveness and inclusion.  We are called to care for those who do evil as well as for those who do good.

            Whatever we do to one another we do to the “Abba” of Jesus.  This is true also of what we do the least of Abba’s other creatures.  Abba is in our midst and works in and through us to realize the basileia theou.  This is usually translated as “Kingdom of God,” but because Jesus never speaks of “Abba” as a king, I prefer to understand this as the “divine community” or “commonwealth.” 

            Jesus was very clear that we cannot serve both wealth and Abba.  In spite of Jesus’ warning, many of us Christians have been trying to serve both.  We have failed, as Jesus knew we would, and the earth is paying a high price for our betrayal.  Collectively, we are the prodigal children of Abba, who have been worshipping other gods. As the parable of the prodigal son makes clear, Abba rejoices in our coming back when we finally acknowledge the foolishness of our ways.

            The worship of Abba, like the worship of Gaia, leads to the quest for the well being of all creatures, and especially all human ones.  Today, in face of the disasters toward which devotion to economic growth is leading us, it calls for a profound, a truly radical, repentance.  Would that even a tiny fraction of those who say “Lord, Lord,” would join in fresh thinking about the practical meaning for today’s world of devotion to the Abba of Jesus.                 

Eastern View of Economics

I have been asked to say something about the global economy from an East Asian perspective. I can’t really do that. My perspective is a critical Western one. Nevertheless, I can talk about some thinking that comes from the East that is also critical of the dominant Western economic thought, and my appreciation for it. Of course, it will be Eastern thinking as a Westerner interprets it. I’ll mention half a dozen examples, most of them very briefly.

Schumacher is famous for his advocacy of appropriate technology. He also wrote a book named "Buddhist Economics." I think that in fact the book is inspired more by Medieval Catholic thought and practice than by Buddhism, but he rightly saw that in the world today Buddhism is a more potent basis for resisting the economism that rules the West and through it most of the East. This economism is directly opposed to traditional Christian teaching. Jesus said that we could not serve both God and wealth, and it is obvious that Western society is organized in the service of wealth. Tracing the victory of wealth over God in the West is an interesting matter. But Schumacher saw in Buddhism another, even clearer, basis for rejecting economism. Whereas traditional Christianity calls for the subordination of all other commitments to the commitment to God, Buddhism teaches us to give up all craving and attachment, just those aspects of the human psyche that ground economism.

Buddhism has inspired resistance to Western forms of development in several countries, and I will come back to brief discussion of an example. But of special interest to me is the one country that, as a country, is coming closest to acting on Buddhist principles. That is Bhutan, a Buddhist kingdom in the Himalayas. Whereas all other countries are aiming at increasing Gross Domestic or National Product, and thus organizing themselves on economistic principles, Bhutan is committed to Gross National Happiness. In my view, this is so obviously a better goal, that the rest of the world should feel foolish. Why seek wealth if it does not make people happy? And study after study shows that in general it does not. But of course Bhutan’s unique formulation of its national goal in fact only elicits condescending smiles.

Whereas Bhutan is a tiny nation whose policies have negligible effect on the global economy, India is an enormous nation, and the leading figure in its struggle for independence, Mahatma Gandhi, was also the advocate of economic development on very different lines from the victorious one. Western economic theory has no interest in human community. It views individuals or households as the units of economic action and those whose insatiable desires for economic goods should be satisfied as much as possible. The way that human beings are actually bound up with one another through kinship and friendship plays no role in Western economic theory. The result is that the application of economic theory to development, whether in rural North America or in the Third World, systematically destroys village life.

Gandhi wanted India to follow another path, that of community development. He did not question that the vast majority of Indians would benefit from some increase in goods and services, but he wanted to work only for that kind of increase that was compatible with keeping village life intact and even improving it. In India that meant the development of the economy of the existing peasant villages in which most Indians then lived. This would mean "appropriate technology," that is introducing into villages forms of technology that would improve the lives of those who used it without destroying their independence, that is, technology they could understand and service, and, in many cases, produce locally. With such technology the village would gradually become more productive and therefore wealthier, but it would remain intact.

If Gandhi had not been assassinated, it may be that India would have experimented with community development on a large scale. However, he was quickly replaced by Nehru who had learned his economics in England. He got from the Soviet Union a large steel mill, and set India on the path of Western development.

Gandhi’s followers as well as many Western NGOs continued to work, without national help on community development. The movement is far from dead. But in India it has played a minor role in the overall economic development of the country.

Gandhi’s ideas played a much larger role in Sri Lanka, where leading Buddhists, many of them influential in government, adopted them. I met a member of the Senanayeke family at a conference Gordon organized in Claremont and later was hosted in Colombo by other members. Their goal was to restore the system destroyed by the British of largely self-sufficient rural villages. Meanwhile Sri Ariyaratne developed a large Buddhist movement working toward the strengthening of life in the villages. Both opposed both Western values and Western notions of development. Sri Lanka developed a distinctive economy that for a while led to ranking this country quite high in terms of life expectancy and general wellbeing while still quite low in per capita income. One interesting law excluded television from the country. When Sri Lanka accepted the "generous" offer of Japan for the gift of a whole TV system, it was clear that Sri Lanka was succumbing to the lure of consumerism. Canada gave it a huge dam that flooded many of the villages and was designed to support industrial development. These gifts combined with a free university education to so many people for whom there were then no appropriate jobs, as well as a civil war, led to the failure of the experiment failed, but in a time when it is clear, at least to me, that global pursuit of more and more wealth is suicidal for the human race, I think it would be worthwhile to study such efforts.

Another experiment took place on Kerala, a state on the southwest coast of India. Here the leaders were a coalition of Christians and Communists. They focused on meeting the basic needs of the people for food, housing, and health. They also encouraged and enabled women to choose the number of children. The result was that population growth slowed, life expectancy increased, and extreme poverty virtually disappeared – although the per capita income was much the same as in India as a whole. This was possible only by keeping large corporations out. It is my understanding that as India has more fully entered the global economic system, the distinctiveness of Kerala has declined.

Very different experiments were those of the Asian "tigers," Hong Kong, Taiwan, Singapore, South Korea, and Japan. These all committed themselves to industrialization, but none of them shared the Western view that this is best attained by removal of government involvement. Government worked with industrial and financial leaders to gain them a favorable international position. They took advantage of the ideal of free trade in the Western nations without really opening themselves to the same degree. They protected not only their industries but to some extent their communities from the ravages of the global system. They succeeded brilliantly.

The most important experiment for the future of the world is China’s experiment with the "socialist market" economy. This is very much like that of the Asian tigers except that it has been more open to Western companies than the others were in the early days. Its capitalist elements are so apparent that one may wonder whether the term "socialist" is simply window dressing. I think not.

First, the national government retains control of the economy. It still decides how much power can be exercised by corporations, both domestic and foreign. Most important, the banking system belongs to the government. The kind of near financial collapse that we recently went through, salvaged only by enormous government intervention, is no threat to China. If China has any debt, it owes the money to itself. Cumulative interest payments to others cannot occur in this system. Despite Western pressure, I doubt that China will privatize its financial system. I believe that for the Chinese leadership the market is in the service of the nation and that it does not intend to subordinate the national wellbeing to economic considerations in the economistic fashion.

Second, I believe that, despite radical change in the economy, many of the Communist leaders retain some of Marx’s concern for workers, and in China’s case, for peasants. Whether these concerns will lead to any sacrifice of the rate of growth is not yet clear, but I am hopeful.

China’s ecological problems are as massive and visible as those of any country anywhere. Thus far their policies have been more oriented to continuing growth than to curbing environmental destruction. Nevertheless, I believe the government is more committed to developing a new model in this regard than is any other major government. Whether this commitment will truly direct actions is an open question.

This is a point in which much to my astonishment, I have a role to play. However small that role is, it is incomparably greater than my role anywhere else in the world. This is relevant to the question of whether China will really seek a new direction of economic development; so I will use the rest of my time to tell you what is still for me a wholly astonishing story.

About fifteen years ago Zhihe Wang came to Claremont to study with David Griffin. He was an influential member of the Chinese Academy of Social Science, which includes philosophy. He was one of the critics of modernization who were following the European discussion of postmodernism. Griffin launched a series of volumes with SUNY Press on "constructive postmodernism." The first volume, "The Reenchantment of Science," caught Wang’s attention. Although no one in this country paid attention, national conferences were held to discuss it in China. Wang thought constructive postmodernism might be just what China needed.

We in the Center for Process Studies supported Wang’s efforts as much as we could. We identified his work as our China Project. At first it consisted primarily in translating books into Chinese.

In 1998, we held the Third International Whitehead Conference in Claremont. There was a good-sized Chinese delegation. They invited us to have the Fourth Conference in China, and this took place in 2001. This conference greatly expanded interest in our work there. Since then 19 universities have established centers for process thought. There have been many conferences in China, and groups of Chinese have also come to Claremont. Many of our conferences here have been co-sponsored by a major Chinese government think-tank and have had an ecological focus. Wang thinks that they may have influenced the decision of the Chinese government publicly to announce its goal of making of China an "ecological civilization."

In any case, our partner clearly knew about this in advance. Two weeks after the government’s announcement we were holding a conference by that title in Claremont, and we have done so, since then, annually. The papers from these conferences are read by influential people in China. Some of them have been published in full in the digest prepared for China’s top leaders.

Of course, all our discussion of ecological philosophy, ecological urbanization, ecological agriculture, and so forth, has economic assumptions and implications. Next year we will probably deal with these more explicitly and directly. But in the meantime, I will give you an example of our role.

In the spring of 2008 I was invited to keynote a conference in Suzhou on "capital." I was not able to accept; so they changed the dates so that I could stop in Suzhou on my way home from Bangalore where I was committed to speak at the Seventh International Whitehead Conference in January 2009. Now my main point in mentioning this is to indicate the seriousness with which some influential Chinese take process thought or constructive postmodern thought and, accordingly, want to know how it addresses what is for Marxists a central notion.

I agreed despite the fact that I have no technical knowledge about how capital is understood in either Marxism or neo-liberal thought. Actually the paper I wrote was on the history of how corporations moved from being servants of the state to being its masters. There were many specific changes in law and Supreme Court decisions involved. I wanted to encourage China not to let the process of empowerment go too far. What is remarkable is that this amateurish lecture was published in full in the leading Marxist journal in China, when no economics journal in the Western world would even consider publishing anything that I wrote.

 

Capital

I. Introduction

The word "capital," like most important words, has many possible definitions. In its narrowest or most basic meaning , it refers only to those things that make human labor more productive, such as building, machinery, and infrastructure for industrial production. In a much broader and more popular meaning, it refers to all forms of wealth. Since all forms of wealth enable the holder to procure the means of production, this difference is not always important.

Whereas in Marx’s day, most wealth consisted in land and capital in the narrow sense, today financial wealth , often called financial "capital," dwarfs both of these. Since my concerns in this essay are with the ability to own and control capital in the narrow sense, my understanding of capital includes land and financial capital as well as capital in the strict sense. I am using the term in the broad sense. I am not, however, broadening it to the still more inclusive use in which one speaks of moral capital, political capital, social capital, and human capital. These, too, are of great importance, but I remain focused on the strictly economic aspects of capital.

Some forms of capital are essential to the function of virtually all societies Others are not. These distinctions are important as we undertake to imagine a better economy,. For example, the distinction between land and capital in the narrow sense is important as is that between both of these and financial capital. It would be pointless to oppose capital as such.

However, my essay does not engage in those tasks for which these distinctions are important. It focuses on wealth and how the wealthy gain control not only of the economy but also of society and government. "Capitalism," as I use the term is this domination by the wealthy. In earlier times we called it "plutocracy." I write in hopes that despite the large role China is giving to the market, it will not allow the wealthy to take control to the extent they have done so in the United States. China can have a "socialist market" instead of a capitalist one. To maintain this form of socialism requires that China avoid huge concentrations of wealth and economic power. This essay includes accounts of how plutocracy developed in the United States, to indicate how China can make different choices.

 

II. Descriptive and Normative Approaches

I speak as a Christian theologian rather than as an economist. I lack a vast amount of the information and theory that is learned in graduate programs in economics. However, a theologian may be able to make a different kind of contribution.

Economics as an academic discipline aims to be descriptive and analytic rather than historical and normative. In my opinion, when economists give information to governments, they usually also give, or at least imply, normative advice, but their norms are not critically considered. Many economists take much of the present national and global situation as given and then analyze the role of capital within it. Their evaluations are usually of how well a policy contributes to economic growth. I will not compete with them on this turf.

The angle of vision from which one approaches a topic of such vast complexity and importance as capital makes a large difference. Marxist economists have asked different questions and accordingly come up with different answers. Although I am a Christian theist, and Marx rejected theistic religion, we derive our most basic norms from the same source, the ancient Hebrew prophets. Two and a half millennia ago, the Hebrew prophets, in the name of God, passionately condemned the exploitation of the poor by the rich. Such exploitation has continued through the centuries, and it has evoked both protests against such exploitation and efforts to restrict it. I hope that China will continue to make such efforts. China has a chance to learn from the failure of most of these efforts in the United States.

I believe that those who reflect on the economy should do so from an explicitly normative position that they have considered critically. My position is that the economy should serve the political order, which should, in turn, serve the people and the whole world, including the Earth itself. This is unlikely to happen where economic power is concentrated in a relatively small number of hands.

First, large concentrations of wealth distort the market itself. The ideal of the market is a place where everyone can produce and exchange goods. But when wealth is concentrated in a few hands, it gives these hands the power to shape markets to their own advantage. It destroys the "level playing field" affirmed by economists.

For millennia political power has enabled its possessors to gain wealth and share it with those favored by them, and wealth has given its possessors political power. Princes have bestowed wealth on their favorites, and the wealthy have exerted great influence on rulers. Generally they belong to the same social group and so have more shared values and extensive personal acquaintance. The rich are better able to benefit those in political office than are the poor; so they are more courted by politicians. In most countries they own the media on which most are dependent for their understanding of current events. In countries such as the United States, where running for high office is extremely expensive, and media are very influential, few are elected without support from the rich.

There are many wealthy people who care deeply for the well being of the common people and enter the political arena for that reason. But overall, the power conferred by wealth has rarely been used for the common good. It has typically been used to safeguard and increase private wealth at the expense of the poor and powerless. In the United States this has occurred in recent years in an extreme way.

Democratic forms theoretically give equal political power to all citizens, and at times the institutions of democracy do serve to check the control of government by the rich. But any student of history knows that economic inequality is reflected in inequality of political power. My concern is to curb the power of wealth in the United States and to encourage China to avoid following those policies that have produced extreme imbalance in the United States.

The central term of normative Christian thinking in relation to social issues has been "justice." This word has many problems. In some contexts, justice is a matter of rewards and punishments according to the deserts of individuals and nations. In other contexts, the emphasis is on the unbiased application of law. In still others, the focus is on reducing inequality. Other aspects of Christian teaching have checked the pursuit of justice in all these senses, but when one of its meanings, the ideal of equality, is separated from its religious context, it can have destructive consequences. For example, in Europe we point especially to the French Revolution and its aftermath as showing the consequences of pursuing equality in too single-minded a way. The Bolsheviks in the early phases of the Russian Revolution offer another example, and China during the Cultural Revolution also pursued the goal of equality quite intensely. The negative consequences were once again apparent. Unfortunately, it is easier to pull down or kill those who are better off than to raise those who have the least.

The Hebrews tempered the pursuit of these goals with emphases on love and mercy. Their ideal for society was Shalom, which we often translate as peace. It points in somewhat the same direction as the Chinese goal of a "harmonious society." A harmonious society will not emphasize punishment for crimes as much as restoration into community. Nevertheless, in its Hebrew setting, Shalom has a strong sense that the exploitation of the poor and weak by the rich and powerful and the development of excessive inequalities are destructive of peace or harmony. Shalom cannot be separated from justice.

The prophets observed what was happening economically in their day and were shocked and saddened by it. They saw that the concentration of wealth, chiefly in the form of land, tended to increase at the expense of the poor. No doubt much of the expropriation of the land by the rich was legal, but the prophets saw that wealth could corrupt the judgments made in the law courts as well. Corruption followed from the concentration of wealth and exacerbated problems that were built into the system itself.

The prophets developed little theory, but they did influence the legal writings. The Hebrews saw that a very common cause of loss of land was borrowing money at interest on the part of the poor, who gave their land as security. Being unable to pay off the loan with the required interest, they had to surrender their land to the lender. The moral response, built into Hebrew law, was to forbid the taking of interest. Another response was to propose some redistribution every seven years with radical redistribution in the fiftieth, jubilee year. Jesus incorporated ideas of "the jubilee" into his vision of the divine commonwealth (often rendered "Kingdom of God") whose coming he proclaimed.

It is obvious that we cannot find specific answers to our present economic problems in ancient scriptures. Outlawing the charging of interest on debts never worked well in the Christian context. The need to borrow in emergencies or to take advantage of business opportunities is too great. We can, however, appreciate the passion for justice to ordinary people and opposition to concentrating wealth in the hands of a few. We can also agree with the prophets that payment of interest on debts is a major source of growing inequality. The rich make money on their wealth. The poor must pay interest out of the earnings of their labor.

III. Public and Private Property

The normative issues about capital are largely those of who owns or profits from the possession of property. A major question is: what property should belong to the community as a whole, and what should be private? In recent years in the United States, economists have widely supporting the view that the community through "big government" should own or control very little, and that everything that can be privatized should be. In Communist countries, private property has been very limited, with anything that can be used as a means of production belonging to the people through their government.

In democratic countries generally, the tendency has been for government to operate or closely regulate those activities that function best as monopolies, while leaving others in private hands. The police and military forces are almost universally controlled by governments, although private police also exist and even private armies. Nations have postal systems, but private companies now compete with the state system in some of its services. Many countries have national railway systems, although in the United States private companies transport freight. Highway systems are overwhelmingly public, although private highways are now competing with public ones in some places. Almost all nations have public education, although private educational systems are also common. In many countries there are national health care systems, but the United States has emphasized a for-profit medical industry.

On many matters of this sort, the issues are practical. Currently the pressure to privatize has become ideological, and I oppose the libertarian ideology that supports the expansion of private ownership into what should be public realms. This expansion leads overall in directions that are harmful to the poor and destructive of community. In my opinion, the balance between state ownership and private ownership is better in Europe than in the United States. But detailed discussion of such questions is not my purpose. China will find the balance that is best for it.

One thinker who provided a helpful basis for drawing the line between what should be private and what should be public was Henry George. He approached the question with a clear theory that should be widely convincing to those who care about the common good. I am glad that Sun Yat Sen was one of those who agreed with it. According to George, that which is gained through labor, management, entrepreneurship, and investment should belong to those who have invested themselves in it. That which is not a product of human activity should belong to the community represented by the government.

This means that the profits from productive enterprises should belong to those who have earned them. George fully approved of private business and thought that government should give it considerable freedom. Taxes should not take away the fruits of labor. Also the profits of legitimate investment should be respected. On the other hand, the profits from controlling that which is not created by human labor or ingenuity, that which is given by nature or created by the community, should belong to the community.

For George the major form of community property is land. The private ownership of land gives enormous power to a few. The price of the land is often determined by movements of population or by public expenditures on infrastructure. These social expenditures give great additional wealth to land owners. Having inside knowledge of political decisions that will affect population movements and land use gives opportunities for windfall profits for corrupt individuals. This possibility often corrupts local politics. All the profit from land ownership should belong to the community as a whole. Land speculation has been the cause of most depressions. It is of great importance that profits from land ownership belong to the community rather than being appropriated by private citizens.

Herman Daly has persuaded me that the same principle should apply to "virtual wealth," which is now an immensely important part of the economy as a whole. Its creation and management constitute what is known as the "financial industry." One third of the jobs in New York City belong to this "industry." It is a superstructure erected on the "real economy," the one that produces goods and provides services. In recent decades finance has come to dominate the real economy, that is, the production of goods and services. This shift greatly exacerbates the problem of inequality of wealth and power.

In the United States money is created as privately owned banks make loans on which interest must be paid. This gives great power and wealth to the private banks and burdens the government and the population as a whole with large interest payment. The power to create money should belong to the government and be debt free. China should avoid following the United States toward privatization in this area. This topic is even less understood and discussed in the United States than land ownership, and I will return to it below.

There are two basic institutions grounding most of the virtual economy. They are banks and stock exchanges. The former lend money, the latter sell shares of corporations. After discussing the rise of corporations in the next section I will take up the question of financial institutions. I will conclude with a section on local economies.

IV Taming Corporations

Robert A. G. Monks, in a recent book, entitled Corpocracy, (Hoboken, NJ: John Wiley, 2008) writes about "the reality that corporate power has become dominant in the United States and CEO power has become dominant in corporations." (p. xiv) He shows how corporations organized themselves in the early seventies to assert their power, and he is happy about their success. He shows also how the CEO’s organized themselves in the Business Round Table in 1972 and gained greater control of their corporations. He is distressed that CEOs are now using corporations for their private advantage rather than that of stockholders. This does seem to be carrying the principle of "economic rationality" so far that its positive functions disappear. It also concentrates power as well as wealth in fewer and fewer hands. This is capitalism gone mad.

Today the CEOs of transnational corporations are able to control political action in most of the world’s nations. This is one of the most serious problems humanity faces. To consider how businesses can operate and perform their entrepreneurial functions without generating these mammoth corporations, I will briefly review the history of corporations in the United States. (I am following the account of Lawrence E. Mitchell, who published The Speculation Economy: How Finance Triumphed over Industry. Berrett-Koehler, 2007.) As we consider the steps by which corporations transformed themselves in the United States from servants of society into its masters, we may also see ways of avoiding a similar development in China.

The early corporations were chiefly for the construction of public infrastructure such as toll roads and canals. The distinctive feature of corporations was that they gave their owners limited liability. This socialized the risks of investors. If the corporation went bankrupt, the stockholders were not personally liable to repay its creditors. As long as these corporations were performing public services, it made sense for taxpayers to share in the risks.

 

Incorporation required getting a charter from the state legislature. This authorized particular activities and strictly limited the corporation to those specified. It also specified limits to the capitalization of the corporation. Holding property in another state was often restricted. The idea was to limit the size of corporations especially to prevent them from becoming monopolies. Further, the corporation could not own stock in another corporation or merge with it.

After the Civil War there was an explosion of railway building, and much of this was financed by borrowing money. The stock owners felt it was safe for the corporation to borrow huge sums since they risked only their investment. Although industries generally were local and financed by their owners, they found some advantages in incorporating. This was especially true of the ability of the corporation to survive the death of various owners. Gradually, they also began to borrow extensively, benefiting from the limited liability.

Many corporations wanted to expand their activities into related fields, and the courts generally allowed them to do so. Some states began to allow corporations to purchase stock in other corporations. This opened the way to close coordination among corporations. To earn money for the state treasury, New Jersey broke ranks and allowed corporations chartered there to merge with other corporations. It also allowed them to buy other corporations using stock instead of money. This made such purchases far easier. Finally, it allowed the formation of holding companies whose only function was to own other companies.

These changes resulted in the development of mammoth corporations. They also introduced the custom of buying and selling companies. Profits could be made by buying and selling companies without being directly involved in any industrial or productive activity at all.

The size of the new corporations was such that state regulation was impractical. Accordingly, national regulation was proposed. One possibility would have been to require that corporations apply for charters from the national government instead of states. For various reasons, including the desire of corporations not to be effectively regulated, national charters were never adopted.

The courts, which all along have been sympathetic with corporations, eventually gave them the legal status of "persons." To them were applied the privileges listed in the constitutional amendments originally intended to protect newly freed slaves. For example, corporations have freedom of speech, and this includes the freedom to donate to the campaigns of politicians. Their extensive control over Congress is protected by these legal decisions.

There is some antitrust legislation designed to prevent monopolies and ensure that there be competition. However, we are now told that since there is a global economy, competition requires huge size since it is primarily with other global corporations rather that with other American ones. Accordingly, there is little use of antitrust laws to prevent acquisitions and mergers.

The growth of corporations was accompanied by the growth of stock exchanges. Their period of great importance in the United States may be associated with the re-opening of the New York Stock Exchange in 1914. Since then it became the central institution for the financialization of the American economy. The success of corporations is judged by the valuation of their shares on this stock market, and many decisions by corporations are geared to effecting this valuation rather than to improving the long-term health of the corporation.

There is, of course, some regulation through the Security and Exchange Commission, but the ability of these governmental organizations to control financial corporations is modest. And there is one class of financial institutions, commonly called hedge funds, that is officially free from SEC restrictions. The argument is that since these funds invest only the money of the super-rich, there is no need to protect investors.

The buying and selling of corporations has led to the emergence of another kind of financial corporation specializing in this practice. These are "private equity" companies. They specialize in buying up the stock of corporations they believe to be undervalued. They then restructure the company in ways that make it at least appear more profitable. Sometimes they significantly improve the structure and functioning of the business. But sometimes the "improvement" is cosmetic and may even reduce the long-term prospects. The private-equity company then sells shares in the restructured company. This is called "leveraged buyout," since most of the money used to buy up the stock originally is borrowed. The money is repaid from the new business, so that those who invest in the "private equity" company do not have to put up more than a small percentage of the cost.

These are simple examples of activity at the level of finance that may be highly profitable even on occasions when they do not improve actual production. Many of the brightest and best people in the world of business now figure out new ways to make money without investing in any productive activity. Some of the investment vehicles they devise, called derivatives, are so complex that even many bankers do not understand them. Most of the supposed economic growth of recent decades is in the derivative market, which grew to five times the size of all the stock exchanges. This market can increase vastly in size and generate enormous wealth without making any significant contribution to the real economy. Much of the financial world is thus parasitical upon the productive economy. Nevertheless, its mistakes are likely to be costly to the real economy as well. It has become an immensely powerful force in national and international life.

In the United States individual large corporations have become "too large to fail." This is especially true of the great financial empires. The government now accepts the responsibility to bail them out. This frees the banks to speculate wildly, confident that if their gambles don’t work out, the government will save them. This great advantage of large size is but one of the costs of allowing huge concentrations of wealth.

This sketch suggests the possibility that China can have corporations but still avoid capitalism in the sense of having capital control governments. China could allow the development of corporations but require that they either operate only in the province in which they are chartered or be chartered by the national government. This would be meaningful if the corporations were required to serve the public good, and if there were serious evaluation at the time that the corporation sought renewal of its charter. China could also forbid the purchase by corporations of stock in other corporations, and it could forbid interlocking boards, that is, officers of one corporation sitting on the boards of other corporations. These restrictions could be combined with strong anti-trust laws. Together such rules would ensure that corporations existed for socially useful purposes and were numerous.

None of this would interfere with the market in goods and services. Indeed, that market would be, in many ways, freer than in a world dominated by a few giant corporations. They would allow a great deal of entrepreneurial activity, giving large scope to the keen business sense found among so many Chinese, while reducing the concentration of wealth, which leads to the corruption of government.

A more drastic step is possible without undercutting the freedom of the market. We noted that the attraction of the corporation as a way of doing business stemmed chiefly from the limited liability of those who owned it. This is crucial to the current system of ownership, but it separates ownership from responsibility, reducing the interest of most owners to some combination of rising stock prices and income from dividends. Corporations owned by persons and institutions whose only concerns are of this sort inevitably move in the direction of treating profit, sometimes very short-run profits, as the primary goal. If immediate profits and prospects are good, the value of the stock is likely to rise. Most of the owners have no knowledge of the long-term effects of the decisions that are made to secure short-term profits. They are even less interested in the wellbeing of workers, the contribution of the business to the communities in which it operates, or its effects on its natural environment. Hence, even CEOs who personally care about these matters are under pressure to subordinate them to the near-term bottom line.

When owners are personally liable for the effects of what the business does, and for paying the debts the business incurs, their relation to the business are much closer. No business is likely to have more than a few such owners. Stock is not likely to be publicly traded. This would generally limit the size of businesses even more drastically than the earlier suggestions. However, family businesses, even quite large ones, could still flourish.

. Of course, family businesses can be brutally indifferent to the welfare of their employees. Pressure to behave ruthlessly can be exercised by family members or by those who lend them money. Nevertheless, on the whole, owners of family businesses are more likely to have human relations with their workers and some care for their welfare than are those who invest in the stock market simply for the hope of monetary gain. They are more likely to be concerned for the long-term health and reputation of their business and to understand that these are improved by good relations with employees and the community. In short, quite apart from whether these owners are, as persons, more virtuous than CEOs of corporations owned by those who purchase stock simply for profit, they are more likely to act in socially constructive ways.

It is useless to seek for perfection. Indeed, holding standards that are unrealistically high often results in structures of power and modes of implementation that are oppressive. Every system is subject to corruption. The goal should be a system that generally supports socially-constructive action and discourages socially-destructive actions while leaving basic decisions for the society in the hands of a government that is concerned for and responsive to its people. A system of local markets with many participants, playing by rules established by the community, does this better than a global market dominated by a few players who set their own rules.

V. Taming Banks

We have seen how financial institutions have come to dominate industrial ones. Both Marx and the founders of capitalist theory did their work during the industrial revolution, when the question was whether industry should be controlled by private investors or by the state. The reality today is that both industry and most governments are largely controlled by financial institutions. Industrial capitalism required servicing by financial institutions, and banks have always played a central and powerful role. Nevertheless, today’s financial capitalism calls for fresh thinking.

Private commercial banks have always provided practical services, but they have also always been parasitical. Today the parasitic role dominates both in the United States and globally. I hope that China understands the importance of resisting pressures to integrate into the international financial system.

One major weapon of financial institutions in keeping the people, and even governments subservient is obfuscation. Much about money and finance is counter- intuitive, and those in power make few efforts to provide the public with a clear understanding. I will describe the situation in the United States. It may be that these matters are better understood in China.

  1. Most Americans suppose that money is a positive asset.
  2. They suppose that this asset is created by the government when it manufactures currency.
  3. They suppose that the Federal Reserve is an agency of the U.S. government.
  4. They suppose that, like individual households, the government should spend only what it takes in.
  5. They suppose that when the government manufactures currency to pay its bills it causes inflation.
  6. Accordingly, they suppose that ideally the government should pay its debts out of its income. Taxes should equal expenditures.

The reality is very different, and until this reality is widely appreciated, the parasitic work of the commercial banks will not be ended. The situation I am describing does not obtain equally in all countries – perhaps very little in China. Yet even in China there are pressures to enter the global system, and these can be best resisted if that system is understood. I will consider the six points above, giving central attention to the creation of money.

  1. The common idea of money is largely derived from coins and paper money. These are definite assets. We generalize this to bank accounts and then to stocks and bonds. However, it does not take much reflection to see that most money in this extended sense is not like wheat or real estate or precious metals. For me to own a bond is for someone to owe me money. This may be a corporation or it may be the United States government. When I deposit money in the bank, the bank owes me money. The way that the money supply is increased is by the increase of borrowing, that is, debt. It is better to think of most money as debt.
  2. The main way money is now put into circulation is to lend it. If no one borrows money, there will be little of it. If lots of people borrow money, there will be lots of it. This is counter-intuitive because we suppose that the bank can lend only what depositors have placed there. But commercial banks operate on the principle of fractional reserves. As long as they keep a reasonable amount of currency on hand to pay depositors what they want to withdraw, they can lend the remainder repeatedly. Of course, they cannot hand out the currency you have deposited repeatedly, but they can credit the account of many borrowers. Lending is a paper, or electronic, transaction in which cash plays a very small role. When banks lend money based on fractional reserves, they thereby create money that did not previously exist. This is especially counter-intuitive.

How can a bank lend the same money more that once? To simplify, imagine that there is a community in which there is only one bank. Suppose this bank has one million dollars in deposits. Suppose that it keeps $100,000 on hand in reserve to pay to any depositors who want their money. It can then lend $900,000 to applicant A. Applicant A does not want to walk around with all this money; so the bank credits it to A’s account. A can spend the money by writing checks on it. Suppose A buys a fine home from B. B does not want $900,000 in cash; so this sum is added to B’s account. The bank adds $90,000 to its reserves and is ready to lend $810,000 to another customer. As this process continues, the bank adds $9,000,000 to the money supply. Of course in the real world, different customers deposit what they borrow in different banks: so that the creation of money is a collective act. Also, the banks do not pocket the money they create. It is eventually cancelled as the debt is repaid. However, the banks collect interest not just on the first $900,000 note, but on all the additional notes. This is how they profit from their creation of money.

The main problem for the banks is that at any time this beautiful money-making machine can be destroyed by a "panic." Fractional reserve banking assumes that depositors are confident that their money is secure and therefore only withdraw occasionally. If confidence is lost, many will demand that their deposits be returned. But only a small part of these is actually available. Accordingly, the bank collapses. To reduce the danger of such collapse, banks seek governmental assistance. In the United States most accounts are insured by the government; so few depositors fear for the loss of their deposits, and a run on a bank is less likely.

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3) Money can be created in two ways. As I have described above, it can be loaned into existence by banks operating on the fractional reserve system. This creates an economy in which most money is debt. Interest payments on this debt grow faster than the economy as a whole.

On the other hand, money can also be spent into existence by a sovereign government. In American history, this method was used by many of the colonies, by the Continental Congress during the Revolutionary War, and by Abraham Lincoln in the Civil War. Following this method, the government contracts no debt and requires few taxes. However, the banks have opposed this method and succeeded in getting complete control over the money supply, excluding the government from any role. Roosevelt eschewed this method in spending the United States out of the Great Depression and financing World War II. He raised taxes and borrowed from the banks instead. Subsequent administrations have followed his example. This has increased the national debt enormously. The debt need not be paid, but the interest, which is paid, is becoming an ever-larger percentage of the budget. This growth of interest payments is not sustainable.

Like other countries, the United States has a "central bank." Central banks have special prerogatives and responsibilities assigned them by national governments. In some countries the central banks are agencies of the government. Even in these countries these banks are typically run by bankers and often operate largely in the interest of bankers. In the United States, the Federal Reserve Bank is owned by the leading commercial banks.

The American Congress was tricked into creating a privately owned Federal Reserve Bank in 1913. Woodrow Wilson signed the legislation, but in later years expressed his regret in strong language.

Although Franklin Roosevelt insisted that the president should appoint the members of the Federal Reserve Board, the bank continues to be owned, and basically operated, by bankers in the interest of banks. All our currency is now issued by this bank. This means that instead of creating money to pay its expenses, the government must borrow money, much of it from the banks, and pay interest on most of it.

The Federal Reserve sells U.S. bonds to commercial banks. Since it is assumed that these are equivalent to cash in terms of safety and that the government will pay only interest on them in perpetuity, they count as reserves. Thus buying U. S. treasury bonds from Federal Reserve Bank enables the local bank to receive interest on its reserves.

4, 5, and 6) I will consider these together. The financial system I have described requires infusions of new money in order to survive. A loan provides only part of the money that is needed to pay it back, because in addition to the principle, the borrower must pay interest. The money to pay the interest is not available unless additional money is pumped into the system. This can be done by increasing the quantity of debt or by government spending interest-free money into existence. In the United States, only the first method is employed.

Normally government debt is repeatedly rolled over and new debt is acquired. This puts money into the system. If the government actually began to pay off its debt, the system could function only by greatly increased lending by the banks.

Increasing the money supply is not inherently inflationary although the long term tendency is relatively slow inflation. Inflation occurs when the money supply grows more rapidly than business activity. Introducing new money into the money supply is not inflationary when it is used for increasing production. In particular, if it leads to using productive idle facilities and labor more fully, it is not inflationary. If the money supply is increased without sufficient goods, labor, and services available for purchase, this increase will be inflationary. This often occurs in wartime. When money is spent into existence, less of the money supply will require repayment with interest; so pressure to increase it will be reduced.

What then is the objection to the present American system? The objection is that it transfers wealth from the public to the banks and it concentrates wealth and power in fewer and fewer hands. The privatization of the power to create money inherently works in this way. Also, a government that cannot create money cannot provide the services people need without either high taxes or borrowing. A government that retains the power to create money can supply the people with needed services without such high taxes. Once this power is turned over to the banks, they gain immense political power as well. That makes the reversal of this privatization of profit from the creation of money extremely difficult.

China has the great advantage that it has not privatized its central bank. Hence, my account of the disastrous effects of such privatization is intended as a warning. If private banking on the fractional reserve system becomes an important factor in China, China must beware of a "slippery slope." Every increase in the ability of private banks to create money reduces the ability of the government to do so without inflationary consequences. Further, every increase in the concentration of wealth in private banks makes them more influential in government circles. Since China will also be under pressure from international financial institutions to conform increasingly to their patterns, this pressure from without and within may well erode the government’s ability to create money. At that point the claim to be a "socialist" market economy will lose most of its meaning.

Even if the Chinese government maintains and even monopolizes the ability to create money, it is in danger from concentrations of capital, foreign and domestic. The existence of a stock exchange provides opportunities for those with large resources to play an unduly influential role in the economy. Unless the stock exchange is tightly regulated, it is vulnerable to centers of economic power that can drive prices up and down at will. This is especially true when purchases can be made on margin, that is, by putting up only a small part of the total cost. It is my impression that China is seeking to control its stock markets, preventing excessive ownership of stock by foreigners and restricting marginal purchases. My concern is that the more wealth is concentrated, the more powerful become its possessors, and the more concessions they are able to gain from governments. May China learn from the mistakes of others!

Another threat to nations from concentrations of economic power is to their currencies. China is under pressure to float its currency. To do so is to make it highly vulnerable to manipulation. I am glad to see that, so far, China has not succumbed to these pressures.

VI. A Decentralized Economy

Critics of the global system have long been asserting that undirected economic growth on a planet with finite resources and sinks is unsustainable. In the early 1970s a book called Limits to Growth was published. It projected a variety of scenarios that all led to a collapse around 2020. It foresaw rapid growth up until nearly that date, followed by abrupt decline. The powers that be have paid little attention to this danger. As long as growth continued, they have laid their plans on the assumption that it could continue indefinitely.

Very recently, however, the public is beginning to take seriously the threat that the many ways in which humanity tries to deal with its problems will fail. Consider the problem of "peak oil." If in the 1970s we had begun a program of efficient use and switching gradually to other sources of energy, "peak oil" would remain quite far in the future and there might still be some chance to reduce global warming. But despite the predictability of problems, the world has moved ahead, adopting forms of urbanization, agriculture, manufacturing, and transportation that increased the demand for oil.

The major response to the growing awareness that production of oil will soon cease to increase has been to use farmland to produce substitute fuel. The result is that for the first time the global demand for food is exceeding supply. Hence the cost of food rises not only because the cost of the petroleum on which agriculture is based has increased but because food, now, like oil, is globally in short supply. The problem is exacerbated by the globalization of food production, which means that most food must be shipped great distances at increased cost. Hunger and starvation are on the rise.

Meanwhile the continuing use of fossil fuels has caused changes in global weather patterns. These make agricultural production more uncertain. Since overall the changes heat the Earth, the glaciers from which major rivers flow are melting. North China will be among the most hard-hit regions. Since water tables almost everywhere are falling as agriculture has turned to irrigation, much farming will have to return to dependence on the now less predictable rainfall. Some propose that we desalinate ocean water, and this is an important solution for some coastal areas. But the energy required to pump water long distances into the interior is not in sight. The melting of the arctic ice and the Greenland glaciers along with the warming of the ocean will raise sea levels and flood some of the world’s most populous and fertile regions, the deltas of the great rivers.

The environmental refugees from flooded deltas and new deserts are unlikely to be welcomed into already densely populated areas struggling for sufficient food. The resulting violence will add to the difficulties of feeding the global population. Struggles between nations over water supplies will become more violent. Already-scarce resources will be used for mutual slaughter.

I will not pursue these depressing scenarios. I certainly do not know just how all this will work out. But the beginning of the end of the economic globalization project is already visible. A major feature of this project is that agriculture ceases to be used for the feeding of local people and is directed instead to production for export. I have been strongly opposed to this from the beginning, but as long as it was economically profitable, and those who suffered were not politically powerful, it was extended by the World Trade Organization and other international economic organizations working together with huge agricultural corporations and the American government.

Abruptly, now, the predictions of its critics are being realized. Facing the threat of hunger, some countries are refusing further export of what is edible. Those elsewhere who are dependent on importing these foods will suffer. Of course, harvests may be better next year, and pressures to change may ease. But the long-run prospect will have become clearer, and nations will no longer trust the global system of distribution. They will work instead for greater self-sufficiency in essentials. In any case, as transportation costs rise, even narrowly economic calculations will cease to count in favor of the present globalized system. The slogan "Food First" will no longer seem to be the cry of a marginal group.

I believe that for these and other reasons the days of the global economy are numbered, and I rejoice in its anticipated demise. It has done the world great harm. A major function of economic globalization has been to support the vast financial systems that are parasitical on the real economy. It has also speeded up the ecological devastation of the planet and the exhaustion of the resources needed by the real economy. Humanly, it has led to vast movements of peoples in ways that have been culturally and socially destabilizing. Economic globalization has created class societies with differences in wealth and power as great as those against which Marx protested. It is, of course, the extreme extension of capitalism.

Some suppose that without a global market there will be no trade. But the alternative to the global market is not the end of trade but an international market. A global economy denies to national governments the right to shape their own national economies. An international economy consists of national economies that are free to trade or not to tade. China has rightly resisted this surrender of its national prerogatives. It has taken advantage of the globalization of much the world’s economy. This imbalance causes resentment in its trading partners and is unsustainable.

If China boards the sinking ship of globalization, it will share in the impending catastrophes. But because China has moved only partially in that direction, it has the best chance of any major nation of avoiding great suffering as a result of the coming collapse of the global economy. Instead of succumbing to pressures from the World Trade Organization, it is still free, without terrible turmoil, to develop a relatively self-sufficient national economy. Instead of offering its skilled and disciplined but inexpensive labor to work for foreigners, it can re-direct its production from the primacy of export to the primacy of meeting the needs of its own people. In its current commitment to the development of its rural population, it can place emphasis on "Food First."

China is already moving in this direction. The Chinese government should continue to raise minimum wages for workers—quite substantially within a few years. This will make China less competitive in the global market, but Chinese workers will be able to buy more of the products of Chinese factories. Similarly, if the development of West China follows a path of making peasants there more prosperous rather than displacing them from their homes by "modernizing" agriculture just when petroleum- based agriculture is collapsing worldwide, rural China can become a vast market for industrial goods. An export-oriented economy condemns West China to the status of an economic hinterland, but industrialization oriented to Chinese consumption can be far less concentrated on the coast.

Actually I presuppose some of this shift in all my previous suggestions. If China is tied more and more fully into the global system, it will be drawn into the current patterns of financial capitalism. In that case, success in restraining the dominance of those Chinese and foreigners who control capital will be very unlikely. On the other hand, if the Chinese economy is largely independent of the global market, China can experiment with its own form of socially-controlled market economy. Such an economy can, of course, trade with others, but this trade need not involve surrendering control of the national economy to either domestic or foreign capitalists.

Today’s global capitalism, dominated by immense, and immensely powerful, transnational corporations, especially financial ones, can be checked by national economies, and this lecture has dealt with this possibility. However, some of the forces that are already beginning to undermine the global market will threaten the national market in large countries as well. For example, the rise in immediate cost of transportation, in a context where its indirect effects on speeding the melting of the glaciers are recognized, will almost certainly favor local production of food. Further, in times of crisis, the most sustainable economies are those that are closest to the land and the people. Accordingly, experiments in local economies are very much in order.

Local economies require local capital. But in comparison with global corporations and their vast concentrations of capital, the required capital will be on a small scale. Because today the dependence of most local economies on the national and global ones is so great, failure at the larger level is disruptive of local economies as well. The more independent a local economy, the more easily will it sustain itself through global and national crises.

In a healthy local rural economy, money coming in from outside circulates for some time before leaving the locality. For example, if the local economy gets some income from selling agricultural products to other markets, that money will be used for local products and services. It will be used to buy locally-produced food, for example. The recipient of the money will pay a local doctor for needed care. The doctor will buy clothing in a local store. The merchant will buy goods that are locally produced, and so forth. In this case a small amount of export will support considerable useful economic activity locally.

In an unhealthy local rural economy, the money received for the surplus agricultural products will be taken to a store in the nearest city and spent on imported goods. The only member of the local community to benefit will be the one who receives these foreign goods. Much larger exports will be required for the people of the community to get what they need.

Some of the proposals about corporations discussed above could encourage local economies. Another method of encouraging a strong local economy is the use of local currency. This currency will have no use except as a medium of exchange. It will serve in this capacity only locally. But the more it is used the healthier will be the local economy. It will encourage local people to supply goods and services that have previously been brought in from outside. If inflation or other disaster strikes the national currency, the local currency may still function to facilitate the exchange of goods and services.

The discipline of economics in the West is the study of how to make the economy grow. Growth is defined primarily as increasing market activity. A natural, even inevitable, criticism of many of my suggestions is that they will slow economic growth. Until economists accept the idea that the economy should serve social and ecological goals and that increase of market activity is not in itself a suitable goal, it will continue to be very difficult to make genuine progress in rural areas.

Indeed, policies designed to speed economic growth are not neutral with respect to major social goals. They typically increase the rate of consuming scarce resources and polluting the environment. They disrupt existing communities and increase the disparity of wealth. These are the wrong directions for society. Until we can persuade economists to study how the economy can be made to serve society instead of destroying it, we in the West remain in serious trouble.

I fear that in China today many of the problems that beset the West, and especially the United States, are being repeated on a large scale. The greater the concentrations of capital, the more difficult it becomes to maintain political control. Governments become servants of capital. Chinese cities and even provinces are already threatened by this fate.

Perhaps, nevertheless, China can lead in showing another way. China has experimented with various forms of Marxism and found practical problems in their implementation. But the Chinese government has not given up on the idea that the economy should serve society. I hope there are many economists in China who are prepared to bring their technical expertise to bear on the problem of giving freedom to the market, including, of course, to capitalists, while checking the concentration of capital in a few hands and redirecting the flow of capital into socially useful investments. I hope there are many Chinese economists who understand banking and the creation of money far better than I and will help to steer China away from international banks. It is my hope that some of the suggestions I have made in this paper may stimulate thinking about alternative approaches to that task.

Moral Dilemmas in Economics and Ecology

I appreciate this introduction. I am not always treated so kindly. And because it is directly related to the topic of our discussion today, I am going to read a recent statement about me published in The Christian Century, January 23. It is written by two leading Christian ethicists, one Protestant and one Catholic: Max Stackhouse and Dennis McCann.

"Our differences with John Cobb can be simply stated, and though they are directly connected with theology they have consequences for economics. We do not think of God as merely immanent in the historical process or that human history can be understood as a natural unfolding of the cosmos. Cobb's perspective strikes us as more naturalistic than substantively Christian, and it is not without its unacceptable moral costs; it not only relativizes all ethics to the Zeitgeist, it leads to a monism which produces great suffering and pain as can be seen in any number of poor lands around the world. It maligns the implicit universalism of our new global interdependence and denies the associative aspects of modern corporate capitalism (confusing it with the ideology of rugged individualism, which has not been a serious contender since 1929). Cobb ignores the ways corporations, where permitted to develop, are breaking down the barriers between peoples and are allowing the grandchildren of peasants to develop relationships, group solidarities and cosmopolitan understandings that for most of human history were available only to a few elites. We must confront the spiritual, moral, and intellectual challenge of how to guide, and not simply repudiate, the global market that Cobb apparently detests. To follow his 'small is beautiful' vision is to relegate eventually everyone to slow death in subsistence cultures."

Let me set this account of my contribution to theology and economics in context. The January 16th issue of The Christian Century featured a "manifesto" by Stackhouse and McCann. The occasion of the manifesto was the collapse of Communism in eastern Europe and the parallel collapse of the attractiveness of socialism as an alternative way of organizing economic life. The authors proclaimed that in this situation the long debate among Christians as to the more Christian way of ordering society is ended, and it is time now both to endorse corporate capitalism and to devote our Christian energies to working in and with it. They recognize that there are problems, and they believe that when Christians find their own voice they can be effective in guiding corporate capitalism through those problems.

The next issue of The Christian Century carried six responses to the manifesto, including mine. I expressed the view that Stackhouse and McCann are correct that central planning has been shown to be ineffective. But I objected that the global corporate capitalism that they celebrated is not the only alternative. Indeed, this system destroys both human community and the natural environment. The more appropriate direction for Christians to support is relatively self-sufficient local and regional free market economies.

The other five responses elicited appreciative responses. It is clear that Stackhouse and McCann did not take them as fundamentally opposing the direction they support. I think they were correct in singling mine out for vitriolic attack. The practical implications of our proposals are diametrically opposed on many basic issues. Reflection on the issues involved should be a good way to highlight the moral dilemmas in economics and ecology.

Of course, I do not accept their characterization of my position. I do affirm divine transcendence as well as emphasize divine immanence. I certainly do not view history as the unfolding of the cosmos. And I believe my position to be substantively Christian. In my opinion it is their ethics rather than mine that conforms to the present Zeitgeist. I could, therefore, wish for a fairer depiction of my thought. And of course I do not agree that my proposals would relegate everyone eventually to slow death.

But setting aside the distortions and inaccuracies in their characterization of my position, I do believe they are correct in judging that very fundamental matters are at stake, and that the perspective I embody and represent is now the greatest threat to their celebration of global corporate capitalism. And although in my response to them I did not express my theology explicitly, I appreciate and affirm their insight that theological differences do underlie our different perspectives on economics and ecology.

So I have decided to present to you this evening these two points of view on theology, morality, economics, and ecology. I will try to describe the position of Stackhouse and McCann more positively than they depicted mine. It is the dominant position in the church, and it supports the type of policies advocated by most politicians in both parties. Hence, even though I am sure I cannot do it complete justice, it should not be difficult for you to appreciate its plausibility and persuasiveness. I will then explain why I oppose it, and I will propose a different view.

In relation to the two terms of the title, "economics" and "ecology," Stackhouse and McCann are generally aligned with the thinking of the economic community. I am generally aligned with the thinking of those who see ecological issues as more fundamental. Hence, if you want labels, you can identify the two positions as economism and ecologism. I will present first the mainstream Christian position as it lies behind the manifesto of Stackhouse and McCann and gives rise to support for economism.

The mainstream of Western Christian thinking has emphasized God's transcendence. It does not deny divine immanence in the world, but it usually sees this almost exclusively in religious phenomena. It certainly affirms the incarnation of God in Jesus Christ, and it usually sees the Holy Spirit as present in the church and especially in the hearts of believers. But basically it views God as one whom we encounter as an Other, and as one who acts on the world from beyond it.

This transcendent God created the world out of nothing. The purpose of the creation of nature was to provide the context for human beings. It is human beings whom God loves and with whom God seeks community. For their sake God became human and suffered and died. The community of human beings who have responded to that supreme act of God is the Christian church.

To be a Christian is to respond to God's gift to us by witnessing to it and by acting in love toward other human beings. The expression of love involves a concern for their bodily and mental welfare as well as their spiritual wellbeing. Fundamental to this welfare is the economic condition of people.

Through most of human history the great majority of people lived near subsistence levels. When crops were bad, many starved. The rich were called on by the church to share with the poor, but this was at best ameliorative. The total produce of society did not suffice to spread prosperity beyond an elite.

The industrial revolution changed that. For the first time, people learned how to increase production rapidly -- more rapidly than population. This made it possible to raise the great majority of people in whole societies beyond the subsistence level. Of course, some were far richer than others, but in time all benefitted.

Because of the continuing suffering of industrial labor and the vast wealth accumulated by some capitalists, there arose a conviction on the part of many that industrialization should be controlled by the state and its products distributed equally. This vision is associated especially with Marx. But despite its obvious appeal to Christian ideals, it was always founded on erroneous assumptions.

In fact industrialization develops most efficiently and to the greatest benefit of all when it operates within a free market. The motive of self-interest can be harnessed in such a market to the benefit of all, whereas bureaucratic control always and inevitably leads to distortions. Less is produced, and therefore less is available for the people. Furthermore, when there is only one employer, namely the state, people have far less freedom, and in fact centrally planned economies have usually been totalitarian.

One of the cornerstones of economic theory has been that production increases faster as the market is enlarged. There are good reasons for this assertion. Industrialization requires specialization. One factory can efficiently produce enough of a particular product to meet the needs of hundreds of thousands of people -- or even tens of millions. In a large market several giant producers can compete with one another. This forces all of them to seek ever more efficient means of production and to sell their products at the lowest possible price. The result is an abundance of cheap goods. When goods are cheap in relation to wages, the standard of living rises.

This system has worked brilliantly in the North Atlantic countries and Japan. It is now working its magic in Korea, Taiwan, Hong Kong, and Singapore. The Christian goal must be to extend this success to the rest of the world. That requires breaking through the remaining barriers to free trade so that there can be one truly global market.

The major agents of the industrialization that brings prosperity to still impoverished nations are the great transnational corporations. These have the technological and financial resources to bring to the whole world the rapid increase of production that has saved the industrialized nations from subsistence living. Their work is thus fundamentally positive. Of course, they are sometimes insensitive to the human suffering and environmental destruction that they cause, and it is the task of Christians to work with them and through them to minimize this suffering and destruction.

This movement to global industrialization in a global market not only solves the economic problems of the world. It also overcomes the barriers that in the past have set tribe against tribe and nation against nation. The European Economic Community, for example, has overcome the national rivalries that have so often plunged Europe and the whole world into war. As the peoples of the world become more and more interdependent, there emerges a sense of our common humanity that replaces our tribal and national loyalties. Stackhouse and McCann celebrate the "relationships, group solidarities and cosmopolitan understandings" made possible by the new economic order in contrast to the miserable condition of the peasants in traditional societies.

I hope that I have presented the position I ascribe to Stackhouse and McCann in a way that shows its convincing power. I have no question whatsoever as to the sincerity of those who see the world in this way. I rather wish I could do so myself, and as recently as 1969 I did see it more or less that way, even though Stackhouse and McCann are correct that the theology to which I subscribed even then had different implications. We do not always understand the full implications of our own beliefs!

Although I objected to the formulation of my view of immanence and transcendence by Stackhouse and McCann, they rightly begin there in explaining our differences. I believe that God is immanent in all things, not only in special religious phenomena. Life as such reflects and expresses the immanence of God. From my point of view what is immanent is also transcendent. God is in all things, but equally, all things are in God. This means that there is value in all things as they are, and that all things contribute to the richness of the life of God. This way of thinking also leads to a different view of the relationship of humanity and the natural world.

In describing the dominant view in which Stackhouse and McCann participate, I spoke of the natural world as created for the sake of human beings. Humanity is seen as the real purpose of creation, the only real object of God's love. For me, theologically, this is wrong. God loves all creatures, the sparrow as well as the human being. The human being is worth much more than the sparrow, but the sparrow, too, is of value. When we cause suffering to the least of our fellow creatures, we cause suffering to God.

This leads to a rejection of the dualistic view of humanity and nature. The Biblical language of creation in which human beings constitute the most important part is better. If "nature" is taken as the modern word for creation, then human beings are part of nature, not outside it. If "nature" means only that part of God's creation that is not human, then it is important to emphasize the continuity between the natural and the human.

This does not mean, as Stackhouse and McCann suppose, that human history is merely an unfolding of the cosmos. But human history is, indeed, a part of the cosmos. It does not stand outside it. Like every part of the cosmos, only in an eminent degree, it has its own distinctive characteristics, not shared by other cosmic events and processes; so it must be understood in its own terms. But it must also be understood in its interaction with all other parts of creation.

Now if we suppose that God cares for the whole of creation and that human history interacts with all the other processes taking place on this planet, we view the global industrialization that is celebrated by Stackhouse and McCann quite differently. We see it in the context of a long story of human interaction with the other processes of creation. We note that since the domestication of plants and animals, some ten thousand years ago, human beings have changed the face of the earth. They have cut down most of the forests, turned many grasslands into deserts, and lost half or more of the arable land. This has had a massive effect on patterns of rainfall and other aspects of climate. Furthermore, these changes have been accelerated in our own generation.

We note also than in the past two centuries, the destructive effect of human activity on the environment has taken on additional dimensions. I will not rehearse this history. Suffice it to say, that the reduction of the ozone layer and the increasing greenhouse effect are but two of the more dramatic global expressions of these effects.

Looking back we see that many ancient cities were abandoned and whole peoples disappeared when their environments were destroyed by overuse. But these were local events that did not have a major effect on global population. What is now happening appears to be a global event analogous to those local ones.

Obviously industrialization has played a major role in the global assault on the human environment. Continued industrial growth around the world promises to intensify this assault. That means that it will hasten the ecological catastrophes that lie in wait.

You can see, now, why Stackhouse and McCann are so upset by my approach. It calls into fundamental question the process of global industrialization to which they look for the solution of the world's continuing problems. They see any alternative to this process as ceasing to provide the goods people need for a decent life. They believe that to halt or reverse industrialization would condemn all people to slow death. And for reasons I have explained they associate the advance of industrialization with the global market in which the transnational corporations are the major players.

Stackhouse and McCann are not indifferent to environmental problems. They know that these can be serious and harmful to human welfare. But they see these as challenges to be responded to by improvements in the way that industrialization takes place. They do not view them as inherent in industrialization as such. They believe that there can be economic growth based on industrialization without unacceptable environmental costs. Indeed, they would probably say that only as industrialization brings prosperity are the resources available to deal with environmental problems.

I trust you will see that they are not altogether wrong in their insistence that environmental problems must be dealt with in the process of industrialization rather than through deindustrialization. Those of us who believe that trying to solve the world's problems by further industrialization will only hasten catastrophe must propose something other than the slow death that could certainly result from widespread abandonment of industrial production. Obviously, I have not proposed that. But I did propose self-sufficient regional economies. And from the point of view of economism, that points away from the conditions required by healthy and growing industry.

I take very seriously indeed the challenge to show an alternative way of meeting the economic needs of the world's peoples -- a way that does not further weaken the earth's capacity to sustain us. Our task is to find a way between the Scylla of ecological holocaust to which our present policies are leading us and the Charybdis of degrading poverty that would follow from deindustrialization.

I have used "industrialization" to stand for the process of increasing production through specialization. This process has been inseparably connected with massive use of fossil fuels. It is widely assumed that as fossil fuels give out the only replacement possible will be nuclear fuels. From the ecological point of view, much of the problem with industrialization is its dependence on fuels of this sort. There is a fairly close connection between the amount of such fuel that is used and the amount of resultant pollution or danger.

This suggests one step on which believers in economism and ecologism should be able to agree. Use fuels more efficiently! Especially in the United States we continue to use far more fuel than is necessary. Indeed, until very recently and even now to some extent, our official policies often discourage efficiency. Although it is now clearly demonstrated that the most cost-effective step for most utility companies and industries is to invest in more efficient equipment so as to reduce the use of fuel, the energy policy of the Bush administration, supported by prevailing preferences among economists, gives only lip service to this approach. The emphasis is on increasing production of fuels rather than on achieving the same end product with less fuel. This is sad, but we can hope that this particular perversity will give way to the growing consensus that we should use our resources efficiently. Although I have no direct knowledge of the views of Stackhouse and McCann on this point, I will assume that this is not an issue between us. A major national effort to become more efficient in the use of fuels will slow down the Greenhouse effect.

Beyond this point, however, and such other relatively noncontroversial steps such as increased recycling, the paths suggested by economism and ecologism are likely to diverge. From the point of view of ecologism, becoming much more efficient in our use of energy and other resources is but one of many changes that are needed. The next I will propose is the shortening of supply lines. Goods should be produced nearer to where they are consumed.

The reasons for this are easy to point out. A great deal of fuel is used in transportation. This amount would be reduced with shorter supply lines. Shorter supply lines would require fewer freighters and trucks, the building of which also uses exhaustible resources. Further, preparing goods for transportation often requires much more elaborate packaging than would be needed if the goods were consumed nearby. Much pollution, of the ocean, for example, is caused in the process of transportation, both by accidents and by standard practices. In these and other ways production for local consumption is far less costly to the planet than the present system of global interdependence.

Disciples of economism protest that shortening supply lines means smaller markets and less specialization. Since they take specialization as the key to prosperity, they oppose any such goal. Note the rejection of the "small is beautiful" ideology by Stackhouse and McCann.

From the side of ecologism, there is a double argument at this point. There is first the question of whether in fact there is a limit to the economic gains from specialization and large-scale production. Many studies question that bigger is always better. There is a great deal of evidence that beyond a certain point, varying of course with the type of goods in question, economies of scale disappear. Much of the most efficient factory production today is in medium-size factories. At present these are usually owned by transnational corporations, and their goods are marketed at great distances from production. But there are no technical difficulties in having locally owned small to medium-size factories producing for local and regional markets. Even now in our society most of the innovation and growth occurs in smaller industries that are then bought up by the giants. There is really no reason to think that relatively self-sufficient local or regional economies would be unable to provide well for their people.

But even if it turns out that prices would be higher when goods were produced locally than when they are brought in from all over the world, is that latter procedure really better? From the point of view of ecologism, paying a little more for goods, and having a smaller selection, would be a small price to pay for the reduced level of ecological destruction. Further, paying a little more and having a smaller selection should not be confused with the slow death that Stackhouse and McCann associate with the goal of local self-sufficiency.

Another major area for reducing the use of energy is in transporting people. Here, too, there is a double program needed. First, we need to make our equipment, especially our cars, more efficient. Second, we need to arrange our lives so that we have less need of them.

The latter brings me to the arcologies of Paolo Soleri. He has for many years been envisioning human habitat that would make all services and amenities accessible without the use of private automobiles. His arcologies would also take care of heating and cooling without the use of fossil fuels. Others take steps in this direction, but Soleri shows us the goal of an attractive city that can operate with very little use of fossil fuel. His arcologies would be a major step toward reduced use of fuels and the self-sufficiency of cities.

Although moving toward local self-sufficiency is very objectionable to those committed to economism, it is only one step forward for those committed to ecologism. For us it is important that we shift away from fossil fuels without resorting to nuclear energy. Reducing the total amount of energy used in the manufacturing and transporting of goods, and in the transporting of people and the heating and cooling of homes and offices is helpful in itself. The less we use fossil fuels and other forms of polluting or dangerous energy the better. But the goal is to shift away from all such energy to benign forms, ideally to passive solar energy. This shift is already realistically proposed in Soleri's arcologies. It will be possible elsewhere only as the total energy use is drastically reduced by a combination of technical efficiency and reordering society.

So far I have emphasized that enormous improvements can be made without any reduction in the availability to consumers of either goods or services. I am arguing that the legitimate goals of economism, the provision of the goods and services people need, can be met by a system that is far less destructive of the environment than the global interdependence controlled by transnational corporations that is advocated by Stackhouse and McCann. But from the point of view of ecologism, still more change may be needed.

Although I emphasized that I do not advocate deindustrialization in general, nevertheless, we may need some shift back from factory production to the work of artisans. Some of that is already occurring because of the enjoyment experienced by artisans and the preference of some consumers for handmade goods. If factories had to pay the true costs of the energy they use, handmade goods of some types could compete more successfully with those made in factories.

Both handmade goods and factory products could be made to be more durable. Also, it would be possible to create a climate in which long-lasting products would be prized and there would be less need to replace goods frequently. Such a shift would also reduce the use of energy as well as other resources. It would not lower the quality of life.

Finally, from the point of view of one committed to ecologism, the affluent could do with less. Most of us have more goods than we need -- often more than we really want. Human happiness is little improved by this surfeit of consumption and possession. As ecologism becomes more widespread, consumerism will decline with no loss to the real quality of life.

From the point of view of economism, on the other hand, these changes are highly undesirable. Reduced consumption would lead to a decline in the size of the economy, whereas our whole economic system is based on growth. Reduced consumption is what we call a recession, and the sort of reduction I envision would be much worse -- a depression. The only way out of a depression is renewed growth; so my proposals would be a recipe for permanent depression.

Here we face a profound dilemma. From the point of view of ecologism we can describe a society in which all the necessities and many of the luxuries of life can be made available to all with greatly reduced pressure on the environment. This society is technically possible and does not violate anything deep-seated in human nature. Yet we are told that this would be economically disastrous, and we know that those who say this are sincere.

To understand this requires a deeper reflection about economism. It turns out to operate at two levels. The first level is an admirable concern that the goods and services people need for a decent life be available to them. The second concern is bound up with a particular theory, a particular ordering of economic life. Ecologism is compatible with economism at the first level -- or so I have argued above. But it is strongly opposed to economism at the second level. Against this it argues for fresh thinking about the economic order, a thinking that locates the human economy in the larger economy of nature.

Consider why reduced consumption is disastrous. It means that industry can sell less, will produce less, and will lay off workers. These workers will not be able to buy as much as before and hence a vicious circle is instituted. We might propose that instead of laying off workers, the factory should reduce the hours of all. If demand declined by twenty-five per cent, then the work week would be reduced from forty to thirty hours. Of course, wages would also be reduced by twenty-five per cent.

The economist points out that a drastic cut in pay of this sort is a massive hardship. Workers will not be able to maintain payments on their cars and homes. Their children will have to drop out of college. The crisis spreads.

But, of course, all of this assumes the present economy and way of life. Suppose instead that our workers lived in an arcology and had no need of cars. Suppose their utility bills are negligible. Suppose that they acquired more long-lasting goods, so that they had less need to replace them. In other words, suppose just those things which in this proposal lead to reduced demand. In that case, receiving a lower wage would not be a hardship, and many would find the shorter workweek a boon. If one can attain as good a life with a shorter workweek, why should this be considered a disaster? If further changes reduce demand still further, and hours are cut still more, surely that is not to be regarded as a loss from the point of view of true human wellbeing!

Or if a shift from capital-intensive to labor-intensive production occurs, then the reduced need for workers in the factory will be compensated by increased need of workers as artisans. But surely this is not evil either, from a human point of view. Many people prefer the personal creation of goods to the routine work in the factory. If the goods people need and want can be supplied in this way, why should this be viewed as an economic disaster?

Nevertheless, it is clear that contemporary economic theory is all oriented to growth of production. The academic discipline of economics as it now exists is the study of how to make the economy grow. The underlying assumption is that only a growing economy can supply growing human needs and desires. I am making proposals as to how to make the economy shrink without reducing the quality of life. There is no community of economists discussing how this can be done. As it now stands in general, as well as in the form represented by Stackhouse and McCann, economism involves commitment to increase of production. From their point of view, not to be committed to that growth is tantamount to recommending slow death -- as they say in their response to me.

I have focused thus far on the urban-industrial scene. It is at least equally important to deal with the production of food. We need to realize that overall food production on this planet since the domestication of plants and animals has been on an unsustainable basis. The goal of economic growth applied to agriculture has devastatingly heightened the unsustainable character of production. Soils are eroded and poisoned on a massive scale. I have been speaking of how the production of other goods and services could shift to a sustainable basis. There can be no more important topic than how food production can also be shifted to a sustainable basis.

The first step here would be the de-industrialization of agriculture. I did not advocate the de-industrialization of production generally. Given our global population, I do not believe that sufficient goods can be provided without industrialization. But with agriculture the situation is different. Industrialization shifts agriculture from being labor-intensive to being energy-intensive. The cost is not only that inherent in the use of energy. It also involves an exploitative attitude toward the land that has far reaching results. The agriculturally productive land that remains to us must be treated with the loving respect that is possible only when the human relation to the land is renewed.

This means a profound reversal, of course. Under the banner of economism our national policies have consistently favored bigness in farms. There has been a concerted effort to reduce the need for labor in agriculture so as to fill jobs in industry and low paid service in cities. Rural America has been decimated by these successful governmental policies. From the perspective of ecologism all this has been exactly wrong and needs to be reversed. Government policies should favor much smaller farms worked by owners who care for the land. Of course they will continue to use equipment that consumes fossil fuels; but on small, diversified, labor-intensive farms, the quantity used will be greatly reduced. Also farmers will find many jobs that can be done better with horses or mules. They will invest far less in equipment and be far less in debt. They will supply many of their own needs, so that they will not be so totally dependent on markets as they now are. Also they will grow diversified products for local markets much more than single crops for distant ones. International commodity markets dominated by a few giants will no longer control their fate.

I do not think I underestimate how difficult this reversal will be. But I also know it will not suffice. Small family farms have also been unsustainable. Few have done all they could to preserve and regenerate their soils. But even those whose practice is a model for all are still unsustainable in the very long run.

The person who has taught me this is Wes Jackson, and being sponsored tonight by his institute and speaking in the neighborhood of his pioneering experiments, I will not develop this point. If you have not heard him, you must. He has persuaded me that as long as our food supply is based on annuals, it will not be truly sustainable. Hence to develop perennial plants as the basis of the agriculture of the future is a matter of utmost importance.

The likelihood that Stackhouse and McCann -- or other devotees of the dominant economism -- would follow much if any of what I have said is slight. But even if they agreed that in already industrialized countries with adequate productive capacity a shift toward regional self-sufficiency would be possible, they would be likely to argue that this withdrawal from the global market on the part of the wealthy nations would be unconscionable. The way in which Japan, Korea, Hong Kong, Taiwan, and Singapore have moved toward our standard of living is by selling us their manufactured goods. If we stop buying, their economies would be destroyed. Even more important, the hope of other, still impoverished Third World nations to become industrialized and prosperous depends on the global market.

This is the greatest moral dilemma faced by ecologism. It is true that the hopes of the leaders of most Third World countries are pinned on investments by First World corporations and on First World markets, especially the United States, for their goods. The system has worked for the countries noted. One may argue that they have paid a high price for their success, but nevertheless the success, at least in economic terms, is truly impressive. In a single generation they have accomplished what required a century in the West. If this is the one way in which progress can be made in meeting the economic needs and wants of people, then to shut the door on the billions who have not yet made the transition to abundance does indeed appear to be immoral!

Nevertheless, I am not persuaded by this argument to change the direction of my recommendations. I have several reasons.

First, the planet simply cannot support its present population, much less the much larger one anticipated in the future, using resources at the per capita rate now typical in the First World. Hence the idea of solving the Third World's problem in this way is completely unrealistic. This is even more apparent when we realize that the proposed scenario assumes continuing growth of resource use in the already affluent world as well. It proposes no point at which per capita resource use would cease to grow anywhere, since its whole theory is about how to increase production and consumption.

Second, even if there were no physical limits of the sort I have indicated, the economics simply cannot work. The countries that have succeeded have done so by running favorable trade balances over a sustained period of time, especially with the United States. But the United States cannot run an unfavorable balance of trade of vastly growing proportions indefinitely. At this point we can keep our trade unbalanced by selling our assets to our creditors. Japan, especially, has bought huge amounts of American real estate. But surely there must be some limit to how much of our land we are prepared to exchange for consumer goods. We must leave something for our children.

Third, it is very doubtful that many other Third World countries have the political and social ability to emulate the few successful ones. The successful ones generated capital internally, exercised tight control over labor, which acceded in the hope of future rewards, and restricted their own consumption. Most Third World countries lack the capital, the national solidarity, the political leadership, and the business experience to follow in this path.

Indeed, what is being proposed today for most of them is quite different. The successful countries exercised tight national control over their own economies. What is now being proposed in the name of economism is that national boundaries play less and less role in the global market. The idea is that capital will flow freely wherever it can be most profitably invested. All restrictions on the movement of goods will also be abolished. The hope for the Third World is that as the local governments cease interfering in the economies, the great transnational corporations will find it profitable to invest in their countries, taking advantage of their cheap, abundant, and docile labor as well as their lack of environmental regulations.

The real question is not whether the successful Asian countries can be emulated in the Third World generally but whether investments controlled by transnational corporations function to bring prosperity to the local people. My own judgment is negative. I do not know of any success stories in development where ownership and control of investments is by transnational corporations whose natural and appropriate interest is their own profits. And I do not foresee such successes.

Consider such examples as the purchase of Philippine and Indonesian forests by Japan. Of course, Japan made payments to the governments of the Philippines and Indonesia and to some large landowners. These were, presumably, of some economic benefit to those countries. Also, Japan employed considerable numbers of Philippinos and Indonesians to cut down the forests and ship out the logs. That, too, was of some help to the economies. But if we compare these gains with the permanent loss to those peoples of the services performed by the forests, the damage to the rivers and to the agricultural lands by the erosion of the mountainsides, the loss of fisheries, and so forth, one can hardly judge that the lot of the people has been improved.

Of course, transnational companies do not always only exploit nonrenewable resources. They sometimes invest in productive enterprises. Here the balance sheet is likely to be better. Usually, however, they do not produce for the local market. They use local labor to produce cheaply goods to be shipped elsewhere for sale. Some Third World countries will not allow the transnationals to build these plants unless there is local participation in investment and unless local management capability is developed. But it is just these restrictions that the advocates of the global market are now working to overcome. Where nothing of this sort is done, the benefit to the local community is limited to the employment of unskilled labor at local wages -- or very slightly higher. If the alternative is unemployment, then there is some gain. If the alternative could be the employment of that labor in meeting some local need or producing something for the local market, then there is a loss.

Another major form of investment in the Third World is in agriculture. A pineapple plantation can be taken as a typical example. Usually the government cooperates in evicting subsistence farmers from the land in anticipation of earning foreign exchange through the export of the pineapples. Some of the subsistence farmers can get jobs on the plantation. These are paid wages that exceed in cash what they formerly earned. But formerly they were able to support themselves from their own farms. Now they must buy everything. Almost always they end up eating less well than before. Indeed, malnutrition becomes a serious problem among these agricultural workers. Since the plantation does not need all the farmers who have been evicted, others go to growing slums surrounding the cities. There can be little doubt that the lot of the farmers is degraded.

On the other hand, from the point of view of economism, there has been some gain. There is now an exportable surplus. This makes possible the importation of goods. Of course, the imported goods do not go to the displaced farmers. They go to the middle and upper classes who can now afford to buy automobiles and television sets. Thus the poor become poorer and the rich become richer.

It is my conviction that other models for Third World development must be found, that the one recommended by economism is disastrous. Some thinking about this has been done by those Latin Americans who have developed "dependency theory." They have shown how what has been called development in their countries has not "developed" the mass of the poor people. They have become more destitute than ever. They are less and less able to have any control over their own lives. They are dependent on the rich in their own locale. These are dependent on capitalists in the major cities. And these are dependent on the great centers of economic power in Europe, North America, and Japan. The system works to make the resources, natural and human, benefit the owners of capital. It does nothing for labor.

It uses the natural resources of the region, most of them nonrenewable, for the benefit of people who live elsewhere. And it leaves the nation as a whole less and less able to work itself out of its poverty and weakness.

I am not happy with what I have learned in my studies of Third World development. They have led me to the conclusion that what we have called development has been a new form of colonialism. Colonialism here means that the power to make decisions is held by powers outside the colonized countries and that the decisions are made in the interests of those powers. In the old colonialism these powers were usually governments. Now these powers are corporations that are but little subject to any governments. I do not think this neo-colonialism is an improvement over the old form. In both cases, an elite within the colonized country benefits economically from the arrangement and participates in First World lifestyle. But the masses of the people have no prospects of either political freedom or economic empowerment.

What would happen if the planet as a whole changed its goal from a unified and interdependent global economy to a multiplicity of relatively self-sufficient local and regional ones? I wish that I could present a positive scenario of which I could feel confident. I cannot. Nevertheless, I do believe that movements of liberation in these countries would have a much better chance. The United States would not feel that it had to suppress revolutions such as the one in Nicaragua, and it is my opinion that if the Sandinistas has been assisted and encouraged, instead of forced to devote most of their resources to defending themselves militarily, their government would have led to a Nicaraguan economy that did much more for the masses of the people than had ever been done before. It could have become a model for other Latin American countries, without the authoritarian and oppressive government that has corrupted almost all previous revolutions of the poor. That is now water over the dam. But the aspirations of the people of Latin America have not been ended. If the external forces of neocolonialism were removed, the chance that relatively self-sufficient local economies will emerge, and will provide a better living for their people, is enhanced. In general I am quite sure that the common people of Central America will eat better when their land is used to produce food for them rather than to raise fruits and cattle for North American consumption.

Despite my recognition that there can be no assurance of happy outcomes throughout the Third World if they become more independent economically, my conviction remains that this is the only real long-term hope they can have. The sooner policies shift in this direction, the better the chance of economic success.

I hope that I have posed the issues in such a way that the moral dilemmas have become clear. I have certainly not concealed that my own position is an extreme and revolutionary one. I see no possibility of a happy outcome of the direction we are now proceeding under the guidance of economism. I am deeply distressed by the prospect that Christianity will function to give sanction to this suicidal direction. It is urgent that the best theological, ethical, and economic minds join those already committed to ecologism in fundamental revisioning of what makes for the good society.

But though I am deeply convinced that the ideas and ideals of economism are wrong, I am also quite sure that they are honestly held by persons who are sincere in their Christian beliefs and committed to the wellbeing of humanity. Moral dilemmas do not arise in disputes between the good guys and the bad guys. The moral dilemmas we now face in economics and ecology arise from the clash of two quite different visions of reality, two ways of understanding God's relation to the world. I hope that, despite my inability to deal fairly with views with which I disagree, you are able to appreciate both the more traditional Christian vision I reject and the, in my view more Biblical, one, that I affirm. What we believe religiously does profoundly affect how we act personally, and what public policies we espouse. It is time for us to reflect with greater seriousness about our theologies, asking whether the one we have inherited is adequate to give us the guidance we need in this time. It is my hope, of course, that you will decide that it is not, that we need to return to a more Biblical and holistic vision. But whatever the outcome of your own reflection, I also hope that we can continue the discussion with mutual respect for one another as faithful Christians.

An American Protestant Perspective on World Order

Whereas European Protestantism was largely shaped by state support of particular churches and adjustment to the needs of other religious groups, American Protestantism was largely shaped by autonomous churches. These held the state at arms length, demanding freedom to order their own affairs. Needless to say, the history on both sides of the Atlantic was more complicated than that, but for the purposes of this paper, this generalization will serve.

There was a close connection between the autonomy of churches and local autonomy generally. In general, in the early days, each village had considerable economic self-sufficiency and wanted minimal interference from distant governments. There was a stronger sense of being part of a state than of being a citizen of the United States. The United States was understood as a federation of states each of which retained those powers not delegated to the national government.

The churches played an important role in shaping the self-understanding of the people as well as experience in self-government. The personal responsibility taught and practiced in the churches led to the establishment of other voluntary associations to meet community needs. The churches also provided a model of connectedness of the people in one community with those in others.

This model had great strengths and played an important role in shaping our national life. It also had great weaknesses. The greatest of these is that local communities, including congregations, often embody the tyranny of the majority. They discourage free thinking and lifestyles not approved by the majority. Most seriously, in the history of the United States, they tolerate drastic discrimination against those lacking the power to resist. The most extreme and important examples are discrimination against Blacks, first as slaves and subsequently as a segregated, disenfranchised, and shamelessly exploited minority.

Although the record of Protestants in relation to slavery and segregation is far from admirable, nevertheless, the Protestant conscience was a major seedbed of opposition. Because local autonomy and states rights became largely synonymous with the rights of Southern whites to enslave and, subsequently, segregate Blacks, Protestants committed to humane Christian values turned to the power of the national government to override the autonomy of local communities and states. A new Protestant model was born. In this model it became the duty of Protestants to encourage the national government to guarantee individual rights throughout the nation. These rights were not only personal freedom and the ability to participate in the political process but also the right to an adequate, free education, to sufficient food and economic support, and to equal treatment in public facilities. They were designed to provide equal opportunities not only for persons of diverse races but also for those of diverse religions, and to women.

These two Protestant models of political order have been in tension for nearly two centuries. The Civil War was a contest between them, resulting in the weakening of the former. The civil rights struggle renewed this contest with further strengthening of the role of the national government over against local communities and states.

Despite the practical resistance to the civil rights struggle on the part of numerous Protestant congregations, especially in the South, most national and regional church bodies were supportive of the extension of equal rights in this way. Those Protestants who resisted often did so with a bad conscience. Their claimed Scriptural support was not convincing even to themselves. The formal appeal to local autonomy and states rights sounded hollow when used as a rationale for continuing discrimination. Opponents preferred to debate means and timing rather than ultimate principles. They were not able to rally a Christian movement around their resistance. The Protestant initiative was in the hands of those who sought the intervention of the national government to overcome local and regional injustices.

However, as the model that emphasizes the national government and the individual rights of all its citizens triumphed, it pushed the discussion of rights into areas that evoked a different response. The three most important for our purposes are abortion rights, gay rights, and the right to die. Alongside these are the restrictions placed on the freedom to express majority religious views in the public schools. On topics such as these many Protestants feel that they can and should resist conscientiously as believers.

The two models have thus led to a deep split within contemporary American Protestantism. On the whole, those who want the national government to insure individual rights support abortion rights, gay rights, and the right to die and believe that the public schools should be religiously neutral. On the whole, those Protestants who oppose abortion rights, gay rights, and the right to die, and believe that prayer should be allowed in public schools in some form, want the national government to reduce its intrusive role.

I am writing about the Protestant experience, but one part of the Protestant experience has been its experience of Roman Catholics. The experience of Catholics has not placed the same emphasis on local autonomy as characterized Protestantism during the formative period of the nation. This meant that as Protestants turned to the national government to realize its humane ends, cooperation with Catholics was often possible. However, as the humane ends sought by Protestants moved into areas of gender and sexuality and abortion, this alliance was split. Catholics began to cooperate with those Protestants who agreed with them on these issues even when their attitudes toward centralization of power differed.

The polarization of Protestantism, once established around these issues, has extended to other topics. The national welfare system was a triumph for those who want the national government to insure that no citizen is left destitute. Those who oppose the centralization of power in the national government have successfully led in first steps to decentralize control.

On the whole, those Protestants who favor the national system want to improve the quality and quantity of help to the poor, insuring that in an affluent nation such as ours noone goes hungry, unclothed, or homeless. On the whole, those who favor decentralization also want to shrink the system as a whole, forcing more of the poor to fend for themselves. They believe that the national system has created a culture of dependency that works against responsible personal behavior on the part of the poor.

After a century in which the nationally visible expressions of Protestantism were seeking the wellbeing and freedom of all citizens through national guarantees, we are now in a situation in which the most visible national expression of Protestantism is calling for community control and freedom from the interference of the national government. To leaders of the oldline denominations, this appears as profoundly retrograde. But to many of the leaders of the new Protestant right, it seems to be a recovery of earlier American Protestant values that have never died out in local communities.

This deep division within American Protestantism has made it difficult for the oldline denominations to give significant leadership in American society. They have united with Roman Catholics to counter tendencies to dehumanize immigrants and the poor and in order to insure that the desire to balance the budget not lead to policies that cause real misery among helpless people. But on the cutting edge issues of abortion rights, gay rights, and the right to die, they speak at best with a divided voice. Even their earlier strong support for women's rights is now somewhat muted.

As a result, among those impatient to move forward a third model has developed, that of caucusing and networking. Caucuses are ways in which groups who find the official positions of the church wrong or inadequate can organize to give voice and influence to their views. Networking connects them with persons in other churches, or outside the churches, who share their concerns. Individual caucuses can gain support from this wider community and develop programs of action independent of existing church structures. Blacks and women pioneered this pattern. It is now important especially to the gay rights movement, on the one hand, and to conservative evangelicals, on the other.

This pattern supplements another, more deeply established, one. Many individual Protestants join organizations with specialized focus on issues that seem important to them. Generally they feel that the church supports these efforts and recognizes that many of them need to be pursued on an ecumenical or purely secular basis. These nongovernmental organizations thus have strong support in the Protestant culture and specifically from active members of Protestant congregations.

II

None of these approaches to the public expression of Protestant faith have dealt effectively with what I take to be the most important question facing those concerned with world order. What is the proper role of the economy in such an order? This is the most important question because, since World War II, the economy has become the dominant player in shaping world order, replacing the nation state in that role.

Protestant values and ideas have played a part in this global triumph of the economy. The economic thinking that supports the present globalization of the economy arose in Protestant Scotland. It shared with Calvinist theology the belief that human beings are fundamentally selfish or self-interested. It differed from Calvinist theology in that it judged that instead of resisting this selfishness, in economic transactions, at least, it should be accepted. The world is so structured that when each person or household intelligently seeks economic advantage, the economy as a whole will grow, so that there will be more goods and services for all.

Adam Smith, the founder of classical liberal economic theory, was also deeply concerned with morality. His ethical thinking was based on the presence and importance of sympathy in human relations. The community generated by such sympathy provided the context within which market transactions took place. Community feeling and moral sanctions would insure honesty among those who traded. He assumed that national feeling placed needed boundaries around the market. His argument was only that it was better to allow the market to set prices than to do so politically.

Nevertheless, it was on individual self-interested rationality that his economic theory was based, and the result was increasingly to liberate behavior based on this rationality from community restrictions. Since individuals profited more as the size of the market expanded, and since growth in market size was shown to lead to growth in production, restrictions on such growth were removed. Local communities were often destroyed, resulting in large movements of population to industrial centers. Whereas earlier all Christians assumed that the economy was in the service of local communities, now such communities were changed and ordered in the service of the economy.

Although local communities were subordinated to the economy, the nation remained in control. Adams' classic book was entitled "The Wealth of Nations," clearly appealing to national feeling. It was not until after World War II that nations also began subordinating themselves to the growth of the economy, now viewed globally.

It is striking that whereas there is great resistance to surrendering national power to an international body such as the United Nations, there is far less resistance to surrendering national sovereignty to international economic organizations such as the World Trade Organization. In the name of economic growth, most nations are now prepared to enter into agreements with one another, both regionally and globally, that greatly restrict their power to order their own economies. When smaller nations resist, the International Monetary Fund and the World Bank impose structural adjustment policies upon them on pain of their total exclusion from the international economic system.

The shift to which I am pointing is not the beginning of the importance and power of the economy. That has been present for a long time. It is, however, a shift from the primacy of political power to the primacy of economic power. I call this the shift from nationalism to economism as the reigning ideology or religion of our time. Today the transnational corporations and the Bretton Woods institutions are the dominant actors on the world stage. We cannot now talk meaningfully about world order without discussing whether this global commitment to economism is to be accepted.

From a Protestant point of view, it cannot be accepted. For decades Protestants criticized nationalism as a major form of idolatry. We called for loyalties to the whole of humanity that extended beyond national borders. Because economism has overthrown nationalism and reduced the importance of national boundaries, because it has unified the planet into the one world for which many of us hoped, many Protestants appreciate and celebrate its accomplishments. But the time has come to face the fact that the shift of decision-making from political to economic centers of power is not acceptable. It means that decisions are made with responsibility primarily to stockholders rather than to the people as a whole. It means that narrowly economic values outweigh all other human ones. The new idolatry must be condemned at least as strongly as the old one.

Even those who recognize this in principle, tend to mute their criticism in light of the promises that have been made by the ideologists of the global economy. We recognize that human sinfulness always expresses itself in idolatries, but we see some of these idolatries as more harmful than others. Nationalism led the world into two wars of unparalleled destructiveness in this century. It had to be denounced in no uncertain terms. The movement from nationalism to economism did not in itself overcome the threat of war between the proponents of two different economic systems, but it certainly did reduce the threat of war arising out of ancient European national rivalries. And with the global victory of capitalism it seems to have almost ended the threat of major international conflict among the great powers as well. For this real achievement, we should be very grateful indeed, even if we should deplore the low intensity conflicts against the poor that are the more characteristic wars of economism. The real achievement of economism has made us understandably reluctant to attack this new idolatry.

This reluctance has been heightened by six other claims made in behalf of a global economy free from the interference of nation states. They are all premised on the principle that this globalization of the market will increase the rate of economic growth overall. As long as growth is measured in conventional ways, this is probably true. The question is whether global economic growth has or will have the positive consequences that are often claimed for it. If so, Protestant believers in human sinfulness, while retaining their ultimate reservation that economic growth is not God, will cooperate practically with those who pursue it for the sake of attaining these consequences. Let us consider six such claims.

(1) One of the crucial problems facing humankind is the rapid growth of population. This places pressure on scarce resources and leads to increasing pollution. It means that in many places only very rapid economic growth will lead to rising average per capita incomes, and this rate of growth is difficult to attain. The social problems generated by rapid growth threaten to overwhelm many societies.

Many economists long supported the doctrine of the demographic transition. The idea was based on North Atlantic history. Population grew rapidly until industrialization brought standards of living up to a certain threshold. At that point people chose to have fewer children, and population leveled off without any political action.

For several decades after World War II the expectation that economic growth could work this miracle in Third World countries justified devoting all efforts to furthering such growth. During those decades global population grew rapidly with many accompanying problems. With few exceptions there were no signs of a demographic transition. It is true that among the elites of Third World countries living at First World levels led to small families. But the numbers of the poor continued to grow with no sign that they would participate sufficiently in the prosperity generated by growth to cease to rely on their children for support, security, and status.

Only those countries that adopted policies directly designed to reduce population growth were successful in doing so. Eventually, talk of the demographic transition faded. The World Bank began to support programs designed to slow population growth independently of economic growth. The United Nations conferences on population have called for social changes, such as more education and opportunities for women, as well as birth control clinics rather than reliance on the demographic transition. The promise that giving priority to economic growth will solve the problem of population growth has been proven false.

(2) A second great set of problems facing the world deal with the deterioration of the environment. Here again some economists taught that economic growth was the solution of these problems. They noted that when average income in a nation rose to a certain point, people turned attention from issues of economic survival to concern for the health of the environment. At that point they were prepared to legislate for the protection of the environment.

There is, of course, some truth to this theory. When our families are hungry, all of us will do what we must to feed them today, even if we know that this may have undesired consequences tomorrow. When their basic needs are cared for, we may be prepared to consider the more distant future for ourselves and for others.

Unfortunately, the policies adopted when we orient ourselves only to the attainment of economic growth are immensely destructive environmentally. They also, at least for an interim period, often increase the number of people who are sufficiently desparate to add to this destruction. By the time all have become prosperous (should that ever happen), if no policies of environmental protection are in place in the meantime, there will be very little to preserve.

The World Bank, reluctantly at first, acknowledged the need to take account of the environmental impact of its projects. This is clearly a different consideration from whether they will lead to economic growth, and in the long run it may prove a more important one. Since the Rio Earth Summit, the World Bank has taken responsibility to give global leadership to environmental matters quite independently of economic growth. The idea that the quest for economic growth alone will solve environmental problems is no longer plausible.

Actually, the situation here is far worse for economic growth than this refutation of the claim would suggest. Economic growth inherently means increased stress on the environment. Of course, improved technology and other changes can counter this to some extent, and emphasis on these is very important. But in fact these changes, which themselves are rarely pursued by those seeking growth alone, only slow the increased stress on an already overtaxed environment.

Many from the global South oppose the concern of the North about population on the grounds that it is the over consumption of the North rather than increasing population in the South that is the chief cause of global environmental deterioration. Although this is no reason to minimize the population problem, they are correct. Policies oriented to economic growth in a general way aim to increase this over consumption and are inherently destructive of the environment.

(3) The claims to solve the population and environmental problems by economic growth have always seemed somewhat implausible. But other claims have been more convincing and still function to buttress commitment to economism. One of these is that economic growth is necessary in order to reduce unemployment. Only steady, rapid growth, we are told, will be accompanied by increasing employment.

Of course, stated baldly, this is clearly not true. Some countries have had full employment based on state policies and independent of economic growth. It is possible for the state to be the employer of last resort. In most cases such policies have led to great inefficiencies, increasing national debts, and lack of growth. The real claim of neoliberal economists is that a market economy can reduce unemployment without loss of efficiency when it is growing fast enough. For this reason governmental restrictions should be minimized and the market given maximum freedom.

Like all the economistic claims, this one has some truth. For example, unemployment is low in this country at present. One reason is the reduction of interference in the economy by government and labor unions. Companies increase their profits by downsizing and hiring part-time workers to whom they have fewer responsibilities. Profits rise and the wealthy members of society spend more on travel, entertainment, and other activities that require a great deal of service. While well-paying, career jobs in industry and large corporations decline, the number of low-paying menial jobs and part-time jobs increases, so that almost anyone with the capacity to work can find something.

Transposed to most Third World countries, however, the economistic recipe for full employment appears to be a chimera. Growth policies typically increase unemployment at least as a first step. For example, the shift from subsistence farming to agribusiness throws many peasants off the land. Opening the doors to transnational large-scale stores puts numerous neighborhood retailers out of business. Even with lowered wages and thousands of new plants introduced into Mexico to export goods back to the United States, the unemployment situation is not improving. In many Third World countries unemployment and underemployment seem to have become permanent factors in society, partly as a result of the policies imposed on them in the name of economism.

(4) Closely related to the above is the claim that only economic growth can bring an end to degrading poverty. Only it can provide the goods to meet the basic needs of all. Given the horrendous failure at present to meet such needs and the prospects of hugely increased numbers of poor in the future, this is a powerful argument. We do not want to oppose the policies that produce more goods when so many are needed.

The question, however, is whether in fact policies geared to growth tend to meet the basic needs of the poor. The evidence is, at best, mixed. In general, when economic actors call all the shots, the rich get much richer, but the poor remain poor. Whether they are poorer than before is debatable. In the United States, the liberalization of the economy has led to reduced purchasing power per hour of work, but since many now work more hours and more members of the average household work, they are not poorer. On the other hand, in societies where there are few jobs, reduced pay inevitably means more poverty.

The theory is that when economic growth goes far enough, as in a few countries in East Asia, the demand for workers drives wages up without benefit of unions or governmental involvement. All classes finally participate in the new prosperity. This seems to work only in countries with substantial surpluses in international trade, a model that cannot be generalized and one that appears irrelevant for the foreseeable future in most of the Third World.

The reality is that policies adopted for the sake of growth have separated hundreds of millions of people from the means of production (chiefly a plot of land or a commons) and have failed to provide most of them with employment that pays a living wage. Although sufficient industrialization would ultimately reemploy them, the prospect of such industrialization ever being achieved in many countries is remote. Meanwhile it is possible to adopt policies based on the primary importance of meeting the basic needs of all that are far more successful in doing this than is generalized economic growth.

(5) A fifth claim is widely accepted because it sounds almost tautologous. It is that economic growth promotes increased prosperity in general. I have pointed out that not all segments of society share in this growth, but it would seem evident that if there are more goods and services consumed, there is more prosperity in general.

Even this, however, is questionable. Economic growth is normally measured by per capita Gross Domestic Product (GDP). This product includes many defensive costs. For example, our legal system becomes ever more expensive. This is largely a result of the urbanization associated with economic growth. We are not really more prosperous because we are served by more police, more courts, and more prisons unless the consequence is that we are in fact more secure than we were when these expenditures were smaller. But in fact, most of us were more secure when our domestic product was much smaller.

A second example is the shift from one wage-earner to two per family. When one wage earner sufficed to maintain the family, the partner did a great deal of work in the home that was not counted toward the GDP. When both spouses work, of necessity they put the children in child care facilities, eat out more often, pay more for clothes and transportation, and buy more labor saving devices. These all add to the GDP. But the GDP figures grossly exaggerate the increase in prosperity of the family. Real disposable income may rise but little.

A third example is the loss of natural services. When a shopping mall is built where once there were wetlands, this contributes substantially to the GDP. However, the wetlands were performing services free for which society must now pay. Perhaps a sewage treatment plant must be built along with a fish hatchery. Those will also add to the GDP. Nothing is subtracted for the loss of free natural services.

Earthquakes, forest fires, floods, and automobile accidents all add to the GDP, but they do not contribute to our economic prosperity. Also, if we think of our economic wellbeing as having to do with the future as well as the present, then we must consider how present activities contribute to a global warming that will be extremely costly to us and to our descendants.

An additional factor is leisure. Economists recognize that leisure time has positive economic value, but it is not included in the GDP. If it were, changes in leisure time would be a substantial depressant on the resultant figures in this country. As more people have to work longer hours in order to sustain their levels of consumption, leisure is declining.

There can be endless debate as to just how all this should be calculated. My point here is simply to say the per capita GDP does not measure real economic prosperity. There are good reasons to think that our actual economic wellbeing in this country is declining even as per capita GDP figures continue to rise. This possibility is sufficient to suggest that we should not gear our policies primarily to the increase of GDP.

(6) When it is pointed out that economic values are only one set of values among others and not necessarily the most important, economists are wont to say that while this is true, economic growth allows us to pursue these other values more successfully. Again there is some truth to this, although it would be actual economic prosperity, and not what is now called economic growth, that would have this benign effect.

On the other hand, even this claim is highly misleading. The pursuit of economic gain is inherently inimical to many other values, including those most prized by Protestants. To be concerned as much for the individual neighbor as we are for ourselves is an ideal that Protestants derive from the Bible and, indeed, from Jesus' own teaching. We know well how imperfectly we embody this ideal at best. But it retains its tension with our more self-centered motivations and actions, and it moderates our selfishness. Unfortunately, in a society dominated by the market, a different system of values operates.

One major institution through which society expresses and instills its values is education. The social dominance of the market has changed the nature and purpose of our educational system. It was once oriented primarily to providing good citizens and leaders for society and to enabling individuals to live fuller lives. Today it is oriented to preparing people for competitive success in the market place. The ideal of service and the quest for truth have been replaced by the goals of business and professional success.

A society that desires to promote a plurality of values will not give to the market the priority that is now accorded it. The economy will, instead, be one important sector of society among others. The educational system will reflect the social desire that many values be realized in some mutual autonomy.

III

I have explained why, despite its positive accomplishments, the current dominance of economism is radically unacceptable. The first principle of any acceptable world order must be to reestablish social dominance over the economy. If we take the global market as a given around which we are to adjust our thinking about the desirable world order, then I would have to argue for a strong, centralized world government. One strand of American Protestant thinking, as described in Part I, can be very supportive of centralizing power in a world government that would then secure he rights of all people.

But I am not prepared to make that move. I find it necessary to take seriously the negative consequences in alienation from the political process and the weakening of local community that have resulted from the centralization of power in the United states. I also think it almost inevitable that the great economic actors would be able to control a government so remote from ordinary people even more effectively than they now control that of the United States. I believe that, instead, we should envision a world order more human and more under human control than a globally-centralized government is likely to be.

This pessimism about centralization of power in a world government reflects some elements of my Protestant perspective. In this section I will identify a few such elements which I can bring to awareness.

(1) From the time of the Reformation, while encouraging individual virtue, Protestants have been skeptical of its secure attainment. This means that they do not want to concentrate too much power in one hand or place. Dispersal of power and checks and balances help to reduce the corrupting role of power. No system will prevent its corrupt use, but some systems limit the results of such corruption better than others. We must not look for a world order that guarantees good results, but we should look for one that minimizes the effects of individual sinfulness and maximizes the possibility for more positive aspirations to be fulfilled.

(2) American Protestants are deeply committed to wide participation in the making of the decisions that affect the public. The New England town meeting reflected that commitment, which was also quite directly embodied in the decision making of many congregations. But from the beginning we have been open to representative government in distinction from direct participation as well. Unfortunately, it is clear that today a high percentage of Americans no longer participate in the process of selecting such representatives. This alienation should teach us something about the world order we seek.

(3) Because we know that we cannot envision, much less generate, a perfect system, we must build into it principles of self-correction as its failures become apparent. Such corrections, of course, will not solve all the problems and will sometimes make matters worse. But a world order must be flexible and dynamic rather than static.

(4) Despite our sinfulness, we remain members one of another. That means that in general the real gains of one improve the situation of all. We must avoid supposing that in general one group can prosper only at the expense of another. We want a world order that reflects the concern for win/win solutions rather than the combative quest for victory over those with whom one disagrees. Willingness to sacrifice some of our narrow self-interest for the common good is essential for the realization of self-interest as well.

(5) One of the problems with the dominance of economic institutions is their tendency to short-term thinking. The tendency of the theory on which they operate is to suppose, erroneously, that such short-term pursuits will in fact lead to long-term success. Political institutions can also be infected by that myopia. A healthy world order must be so structured that the long-term consequences of actions are fully considered.

(6) A major problem with which we American Protestants have struggled has been the tyranny of the majority especially in local communities and states. We have often ourselves constituted this tyrannous majority. The concern to reduce this tendency should be built into the new world order through protection of the rights of minorities and dissident individuals.

(7) The Biblical concern for "the least of these" requires efforts to meet the basic needs of all human beings, especially those of children. This is not easy. Even meeting the basic physical needs of all thus far eludes us. Meeting the basic psychological, social, and spiritual needs will be still harder, perhaps impossible in a sinful world. But the goal can never be surrendered.

(8) One human need is a respected place in society. This is difficult in a society of extreme variations in wealth and power. Without idealizing sheer equality, it should be our goal to aim at wide distribution of both wealth and power and to minimize the spread within communities and between communities.

(9) These goals at least implicitly require that we consider the long-term environmental sustainability of our societies. But this point should not remain implicit. The fate of human beings is bound up with the fate of the Earth. Unless we devise a world order that gives continuing attention to the health of the Earth, all other achievements will amount to little.

(10) But we should go beyond that, too. We should be concerned about the Earth not only because our fate is inextricable from it, but also because it is valuable in itself and for God. We should recognize that other creatures have the right to share this planet with us and that their well-being makes claims upon us. Unless we have a world order that is constructed with a view to the well-being of all of Earth's inhabitants, it will fail us as well as them.

IV

The move from general principles to a specific proposal is not a simple one. No world order will ensure the realization of the goals, or the embodiment of the principles, listed above. In making my proposals I will be guided by the Protestant experience in this country with its dual experiment in localism and nationalism. We have learned that the great weakness of localism is that it fails to address the injustices that are part of local custom, and that face-to-face communities are often intolerant of difference. We have learned that the great weakness of centralized decision-making is that it leaves many citizens alienated and weakens face-to-face communities and mediating institutions. This opens the door to control of the political system by special interests that can devote time and money to buying influence, and the realization that this is occurring intensifies the alienation of the grassroots.

The model I propose is one of communities of communities and of communities of communities of communities. The basic community should be the neighborhood or village, a group small enough so that people know one another, at least by name and reputation, and can meet together to discuss their shared concerns. Such local communities should have primary responsibility for local problems.

It is obvious, however, that many of the problems of such communities cannot be dealt with at the local level. The local community must work together with other communities to deal with them. As a first step representatives of perhaps fifty to a hundred such communities would meet together to discuss the problems that can be dealt with at that level. These representatives would be chosen by their neighbors on the basis of acquaintance. They would in their turn select representatives to the governing body of the next larger body from among those with whom they worked closely in their level of decision-making. The community of communities might correspond to a county, and the community of communities of communities to the state, but this would have to be worked out in each case.

There is nothing sacrosanct about current borders. Although for practical purposes existing boundaries may need to be respected, we can also consider changes. Northern and Southern California might separate. Many county boundaries may need to be redrawn. States with large populations will require a level of governance not needed in smaller ones.

The next level of community might be the bioregion. Organizing in this way would heighten consciousess of the environment. And responsibility for leadership on environmental matters might be concentrated at that level. This would bring pressure for changing the boundaries of some states.

Representatives of the bioregions would then constitute the governing body of the United States. This would, in turn, send representatives to the Organization of American States, which would in its turn send representatives to the United Nations to meet with representatives of the European Community, Africa, the Middle East, South Asia, Southeast Asia, Northeast Asia, the former Soviet Union, and Pacifica. The name of the United Nations, might be changed to United Regions!

The difference from the current system would be that at the local level voting would be based on some personal acquaintance. The selection of representatives would be only one part of the agenda, with direct voting on other matters of obvious interest to local residents. Alienation from the political process should be reduced. So would the influence of television, of political parties, and, perhaps, of money. At each level, representatives would be chosen from among persons with whom the electors have worked closely. Success at projecting a good image on TV would cease to play the role it now has. The selection of the president would be by representatives chosen at the bioregional level to perform this service. This would be much closer to what was envisioned by the founding fathers than is present practice.

The nation, in this system of order, would not be "sovereign." It would be one level of political organization between the bioregion and the larger regional organization. The relation of the United States to the Organization of American States would be analogous to the relation of individual bioregions to it. Although the United Nations would be the highest body in this structure, it would not be sovereign either. Its power would come from the consent of the regional organizations who are united in it, which would in turn derive from their member nations.

This would not, of course, restore sovereignty to the states. They would simply be one level of political actors

between the counties and the bioregions. They would be related to the nation in much the way the counties were related to it.

If we are to speak of sovereignty at all, this would reside in the people meeting together in local communities. The supposition here is that power originates with them and is delegated to their representatives who in turn delegate to their representatives. The movement is from bottom to top.

How, in such a system, can the tyranny of the majority be checked? Of course, if the people as a whole do not want any such check, none can be implemented. But if, as is now the case, most of the people of the world in general want this tyranny checked, then each level of community of communities can be given the assignment to make sure that the member communities allow participation of all their citizens and respect their right to differ and be different. Those who feel that their rights are not respected can appeal up the sequence of communities in hopes that at some level they will find agreement and redress of grievances. There can be no guarantee.

This structure depends on wide acceptance of a double feature of Christian teaching that is present in many other traditions as well. Much of Christian teaching deals with face to face relationships and is supportive of close community at this level. But Christian teaching equally stresses love for the stranger, even the "enemy". The proposed structure will work only if there can be strong community feeling combined with a concern for the wider world. At both levels many people must recognize that the good of each is bound up with the good of all. Otherwise, there can be neither community nor community of communities. Protestant teaching can contribute to this essential ethos.

This bottom-up structure of political power will not work unless there are deep changes in the economy. If economic decision-making is by transnational corporations impervious to local interests, then the power that can be exercised locally is too limited to hold the interest of people. Present mobility with its community-destroying consequences will continue and grow worse. If the global economy is controlled from the top down, then we will have to develop global political structures capable of controlling it. I am imagining the alternative proposed here as a preferable scenario.

The bottom-up character of this order should be expressed in the system of taxation. Local governments should have the primary taxing power, not one regulated by the state or nation. Other levels should have secondary taxing powers but should also be dependent on funding from the smaller units that make them up. Instead of the present system in the United States in which the federal government collects most of the taxes and then returns money to the states, the states would have more power to tax and would give some of their money to the national government. The United Nations should be given some direct taxing rights, but it should also depend on member contributions.

Thus far I have spoken of geographically defined communities. Our experience has been that these flourish when there are many nongovernmental organizations as well, beginning with the churches. These bring together people of common interests across geographical boundaries. They help to insure that devotion to a local community not involve defensiveness and enmity toward others. At every level of community of communities relevant non-governmental organizations should be given a hearing and should become partners with government when appropriate. We may hope that some of these nongovernmental organizations will have a strong commitment to the environment and the other creatures with which we share it. Otherwise these creatures will have no voice in the political processes. Since the environment of each locality is important to its health and future, the hope will be that each community will take those actions it can for the health of the environment and instruct its representatives to seek other actions that must be taken at a larger level. But we cannot assume that this will always happen. Since the environment in each locality is connected with all the others, and the interests of all are involved, environmental nongovernmental organizations must have the power to appeal to higher levels of government, especially to the bioregional government, to bring pressure to bear on reluctant local groups to act for the good of all.

Nongovernmental organizations can provide a way for those who are not satisfied with their elected representatives to continue their efforts to influence the political process. They can reduce the sense of powerlessness which leads to turning power over to special interests. For this to happen, governments at all levels should structure the testimony of such organizations into their decision-making processes.

One way of clarifying the difference between this model and a world government is to consider the distribution of military and police power. In a world government, presumably, the only real army would be that of this government. In the model here proposed, each level of government would have some ability to enforce its decisions and maintain internal order. None would have overwhelming dominance. The United Nations would have its own army, but this would not be large. It would not be strong enough to impose its rule unilaterally on member nations. To engage in any major police action, it would have to seek the help of regional armies and perhaps of member nations as well. On the other hand, the military forces of these member nations would be reduced, proportionally to their political role. The power of state militias might be somewhat enlarged as well as that of local police.

I have written from the American perspective. I believe that other parts of the world could evolve in a similar direction. Indeed, the European Community is further along in this evolution than are we. In Europe the European parliament and other continental organizations already have considerable power, so that national sovereignty is significantly checked. The model I propose, however, would involve the withdrawal of U.S. military participation from Europe and the replacement of NATO by a purely European military organization. In the future, European organizations would be responsible for maintaining the peace of Europe. The United Nations might be called on to assist.

Although Europe has gone much further toward becoming a community of communities than has the Western Hemisphere, it may have farther to go in turning its nation states into communities of communities. In some countries centralization of power at the national level is entrenched. Empowering local communities to deal with more of their own problems may be more difficult there than here.

V

If a utopian proposal is one whose realization is highly unlikely, then I have offered such. If it is one that, if realized, would solve all problems, then I have not. The tension between locating power close to participating people and providing adequate checks on their denial of rights to unpopular members is ineradicable. Furthermore, representatives at any level, including the bioregional one, may adopt a highly exploitative attitude toward the natural environment that is difficult to check at higher levels.

Decentralization also means accepting enormous differences in the prosperity of different places. Even within the United States, my proposal would cut against the efforts to equalize educational opportunities for all people in a state. Much more of the decision-making about education and of the responsibility to finance it would devolve on local communities. Probably schools would become smaller. The assumption is that strong involvement in the educational system on the part of parents gains more than is lost in this process. But clearly much is risked. The difference in educational opportunities between children in the United States and those in many Third World countries would continue to be extreme. In principle a world government could equalize all of this, but my judgment is that the cost in local involvement and participation would be much too high.

The most utopian feature of my proposal is the decentralization of the economy. This calls for a reversal of trends that have reshaped the world for two hundred years. Most people currently take these trends as being beyond all human control. They are not, but as long as we are taught to think this way there will be little effort to reverse them. The first need is to unmask the claims made for the autonomy of the economy from social and political influence, as I have tried to do in Part II. The second is to begin the process of legislation that will bring economic activity back under the control of governments.

If this does not occur, and currently there are no signs that it will, then local economies will arise independent of the global one. So many are left out of the latter that their efforts to survive lead to the former. At present the local economies play a very minor role, but because in many places they are the only solution to the misery of extreme poverty, they will not go away. If they, rather than the global economy, are recognized as the promise of the future, public policy can give them more support. Perhaps political decentralization will encourage this.

Trade in Process Perspective

We all believe in freedom. So if we are asked whether trade should be free, our spontaneous answer is likely to be "Sure." But spontaneous answers are not always right. It is better to check out what is entailed. We don't really want everybody to be free to do anything. We don't want men to be free to rape women. So it is well to ask who is free and from what are they free.

So who is freed by free trade and from what are they freed? The answer is that economic units, such as firms, are free to do what is in their interest, and that they are free from governmental restrictions. In other words, governments are not free to regulate market transactions. To be for free trade is to be for the transfer of power from the political sector to the economic one. When put in this more precise way, it becomes clear that the issues are more complex. It is not evident that in all cases and in all respects governments should surrender their powers.

What difference can it make in reflecting about such a question that one approaches it in a process perspective? A great deal. But to show that, we will need first to consider the standard argument for free trade. We can then look at its assumptions from a process perspective and see that a change in assumptions would lead to different conclusions.

So how is it argued that governments should not regulate economic transactions? The first step is a convincing one. If government regulation amounts to bureaucratic control over what is produced and how it is priced, we have overwhelming evidence that this leads to extreme inefficiency. The recent collapse of the Eastern European economies is historic evidence of such force that the ideal of centrally planned economies is dead. The market adjusts to the decisions of thousands of actors in such a way as to get the goods needed produced at moderate prices. Market economies consistently outperform centrally planned economies. I take this as established.

The second step in the argument is that the larger the market the better. That is, it is better that capital, goods, and services flow freely in as large an area as possible. For example, it is better that they move freely throughout the United States than that state borders be an impediment to their movement. It is better that they flow freely across the borders with Canada and Mexico than that they be restricted there. And finally it is better that they flow freely throughout the world than that national borders constitute any kind of barrier.

How is this argued in standard economic teaching? The main argument is that the larger the market, the greater the specialization that is possible. If each region specializes in what it can produce most efficiently, total production is increased.

This is generally true, and I do not propose here to criticize it in terms of the exceptions. Instead, the question to be posed is whether the increase of total global production is desirable. It is here that the assumptions of standard economic teaching come into play. A different perspective, the process one, leads to other conclusions.

Perhaps the argument will be clearest if we begin with the challenges. First, there is one challenge that does not lie outside standard economic theory although its seriousness is rarely acknowledged by economists. That is, part of the total global production is "defensive." This means that part of the production is needed because of other parts of the production or because of undesirable changes connected with the increase in production.

That sounds quite abstract; so examples will help. It is generally recognized that the growth of the market encourages urbanization. There are many costs involved in the building of cities that do not contribute to personal consumption. For example, transportation costs far more in an urban industrial economy than in a rural village economy. This adds to gross product, but it is really a cost of production rather than an improvement in economic wellbeing. Furthermore, a rise of crime usually accompanies this urbanization. The cost of police, law courts, and prisons is included in GNP, but a rise in these costs does not mean that consumers are better off. In addition, pollution of air and water are results of economic growth, and society spends considerable money to reverse these changes. These expenditures also add to GNP but not to economic wellbeing.

This means that an increase in Gross Global Product does not necessarily indicate a comparable increase in the goods and services people desire. In a global market many goods are transported for many thousands of miles. The costs of such transportation add to the Gross Global Product. Third World societies face enormous costs in the process of urbanization. And the costs of dealing with pollution around the world rise.

While acknowledging these costs of economic growth, most economists assume that personal consumption still rises as gross product rises and that the defensive portions of personal consumption are negligible. Therefore, they continue to propose policies, such as free trade, that enlarge the size of markets, promote specialization, and thus lead to increase of total production. Whether they are correct in these assumptions is subject to dispute. When efforts have been made to measure economic welfare in distinction from gross product, the results have generally showed greater divergence than economists generally like to suppose. (My own work on this topic is to be found in the Appendix of For the Common Good, which I wrote with Herman Daly. The appendix is chiefly the work of Clifford Cobb.)

A second challenge focuses on distribution. Let us assume that the larger market attained by free trade does lead to greater total consumption of goods and services by the people living in the free trade zone. There is still the question of how this greater consumption is distributed. Do all gain?

Here there is a significant dispute. According to the standard models all gain. Economists may acknowledge that the increased consumption is disproportionately skewed in favor of the rich and that the poor gain least. But, in John Kennedy's language, they assert that "a rising tide lifts all ships." Even if the policies adopted for the sake of growth benefit the rich first, in time the poor also gain. This is the famous "trickle down" theory.

Challengers are not satisfied. First, the evidence does not always support the view that all gain. For example, during the Reagan years, total consumption rose greatly, but homelessness and hunger also increased. Labor earned less per hour in real dollars at the end of his term than at the beginning. It is very difficult to see that "trickle down" has worked. Students of Third World countries such as Brazil often judge that despite great strides in GNP, the poor of Brazil are not only relatively, but absolutely, worse off.

Even if it were true that the poor benefit slightly while the rich benefit greatly, this would not satisfy all challengers. Reduction of the spread of income between the richest and the poorest seems to many to be a proper goal of policy. Here we encounter a theoretical difference between challengers and standard economic theory.

This theory aims at value-neutrality. That means in this instance that economists refuse to judge whether it is better to add to the consumption of one person rather than another, that is, they are unwilling to judge that the increase of wellbeing in toto will be less when a hundred dollars is added to the income of a rich person than when it adds to the income of a poor one. Others, including myself, believe that such judgments are possible and that policy should reflect them. More fundamentally in this context, this latter judgment entails that governments should not abdicate their ability to influence the distribution of income, leaving such decisions to the market.

The third objection brings theoretical issues still more clearly into view. The increase of gross global product involves the increased speed of use of natural resources. The exhaustion of several of these resources is now foreseeable, with oil an especially important example. Policies should be directed toward slowing the use of these resources rather than speeding up this process. The market left to its own devices will eventually raise the price of such resources and thus slow their use, but this price rise would be abrupt and precipitous. The enormous changes involved in adjusting to the unavailability of oil on the part of oil-dependent societies must be made much more gradual if catastrophe is to be avoided. Governmental action is needed here.

Economic theory does not take such problems into account. Indeed, it tends to deny that they are real. In general, economists believe that market pricing will direct technological changes of the sort needed to replace a scarce raw material with an abundant one. They believe that capital expressed in technology can lead to virtually unlimited substitutions, so that they argue that for practical purposes raw materials are unlimited. Indeed, this assumption plays a large role in economic theory, leading to exclusive concentration of attention on capital and labor and virtually denying the importance of the physical world, which enters theory only under the label "land."

From the point of view of process thought, this is profoundly erroneous and has disastrous consequences. Shortages of oil and water and the erosion of topsoil are not irrelevant to the economic wellbeing of humanity. Desertification is a serious matter. The problem with the ozone layer cannot be solved by a technical fix. Indeed, in process perspective, the relation of the human economy to the whole physical system is of primary importance. We need an economy that works with that system in a sustainable way. Since the human economy is already seriously disturbing the natural world, undifferentiated increase in its size is highly undesirable.

The fourth objection also brings out the conflict in assumptions. The specialization and capital mobility that are so prized by economists for their tendency to increase total production have profound affects on human beings that fall outside of the consideration of economists. Economists view human beings as individuals who rationally aim to increase their consumption of goods and services with as little work as possible. Much activity in the market place is explained in this way. But human beings also shape their lives out of concern for human relations and for the larger communities of which they are parts. From the perspective of process thought, relations are fundamentally constitutive of who we are.

Since economists do not see relations as important, they support policies that disrupt them and break up communities. During the past few decades economic theory has been applied to American agriculture. Hundreds of rural communities have disappeared. Economic theory has been applied to industry. As a result hundreds of urban communities, built around factories, have disappeared. From the point of view of economists, these are great success stories. From the point of view of process theology, there have been enormous losses for the sake of questionable gains. The economy should serve human community rather than destroy.

The major defense of the enlarging of the market and the elimination of governmental influence on the economy is that inceased gross product is essential. As we anticipate continued growth in population and see that even now there are hundreds of millions of people whose needs are not met, we are morally obligated to support any measure that will lead to increased production. But from the point of view of process thought, this defense is far from convincing. If we are really concerned about meeting the basic needs of all, then policies that speed up the exhaustion of resources primarily for luxuries of the rich are not indicated. Furthermore, the poor are not benefited by the continuous disruption of their communities. As land once used for subsistence farming is transferred to plantations growing food for export, the GNP is likely to rise, but the ability of ordinary people to feed themselves declines.

There is a better alternative. There can be economies that serve the communities of which they are a part. These will be market economies, but the markets will be small. They will be inside communities that are of a size that encourges popular participation in decisions. The communities will specify the conditions under which all producers operate, conditions that favor the quality of life in terms of health, environment, and working conditions. Those who produce under those conditions will not have to compete with others, outside the community, who pollute the environment and exploit workers.

Small communities cannot be completely self-sufficient. They will want to trade. But they will not have to trade in order to survive. They will be free to trade or not to trade. Accordingly, they will trade only on terms satisfactory to them. This would be more truly "free trade" than what now passes under that label. A people who cannot feed themselves must trade on whatever terms are set by those who control food supplies.

At the outset I gave a definition of free trade that was relatively neutral. I spoke of the freedom of firms to seek economic gain without governmental interference. This is what the academic discipline of economics encourages.

However, we should also note the actual effects. Realistically, today, the "firms" that are seeking freedom from governmental interference are the great multinational corporations. The effect of the new proposals for GATT (General Agreement on Tariffs and Trade) will be to make the world safe for these multinational corporations. Third World governments will no longer be able to work for the development of their own economies. The United States will no longer be able to maintain environmental, health, or labor standards higher than those of other countries. These too will be determined by market forces controlled by multinationals. Much is at stake. Under the apparently attractive rubric of "free trade," we are asked to adopt policies that will enrich a few and ruin us all. This is worth preaching about.

What is Free About Free Trade?

The destiny of the planet is now being settled in relatively obscure negotiations called the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). It is likely that the outcome of these negotiations will be more fateful than the Persian Gulf War, yet they are still discussed only in narrow circles. The negotiations are about extending free trade, and to most people that seems a very technical matter best left to the experts.

Free trade has almost sacred authority. To question its virtue is regarded as naive. Opposing it is equated with protectionism, and that is understood to mean selfishly supporting special interests against the wellbeing of the people as a whole.

Indeed, most opposition to free trade is based on particular interests that will be hurt. Every proposal for "freeing" trade is vigorously opposed by those who will suffer most directly from it. These opponents assure us of their belief in the general principle. It is only the particular that they oppose. This means that if proponents can modify agreements so as to reduce the pain and destruction, opposition melts away.

Congress recently approved "fast track" authorization of free trade agreements; so it can only approve or disapprove the final packages without modification. Without this condition, the administration argued, it could not continue to negotiate the Uruguay Round of GATT. Nor could it continue to negotiate a free trade agreement with Mexico. The administration claimed that other countries will not negotiate seriously with a U.S. delegation that does not have authority to make reliable agreements. Once Congress adopted the "fast track" approach, it virtually promised to accept any agreement the administration makes.

For this reason, opponents of anticipated features of the two international trade agreements, argued strongly against "fast track." These opponents represented two groups: labor and environmentalists. Each had a particular concern.

The concern of labor was that the result of free trade is to move production of goods to be sold in the United States across national boundaries. Many factories that were once employing U.S. workers are now located across the Rio Grande where labor is cheaper and more docile. A free trade agreement with Mexico will accelerate this trend. The proposed new GATT will mean that production will move more freely around the world, with all nations competing for investment. The result will be the continuing reduction of real wages in the United States. It will also eviscerate the remaining power of unions.

The response by the Bush Administration is that while there will be particular hardships for some workers, other U. S. industries will flourish with the expanded markets. Total production will increase, with more goods and services available to all at cheaper prices. Since only one segment of society will suffer and society as a whole will be more prosperous, the administration has promised to help with the re-training of those who lose their jobs.

The concern of environmentalists is that many hard won gains are imperiled. When factories move across the Mexican border, they escape the environmental regulations of the United States. Even if the factory stays in the U.S., the company can gain environmental concessions by threatening to leave if new rules raise production costs. In addition, operations that move across the border continue to send their wastes back to this country in the form of air and water pollution and agricultural products contaminated with chemicals that are banned in this country. Above all, however, there is reason to fear that free trade will limit the sovereignty of our government in protecting the environment, if protective laws are regarded as "restraint of trade." For example, as a result of the Canadian free trade agreement with the United States, the province of British Columbia has had to abandon its support for reforestation. The U. S. timber industry charged that this support has given the Canadian lumber industry an unfair advantage over U. S. lumber. Free trade requires a "level playing field," in which the rules of the game are determined internationally rather than locally or nationally.

The response to the environmentalists' concerns has been that other countries do not like pollution either and that Mexico in particular is in the process of improving its environmental legislation. GATT negotiators are now introducing environmental considerations. The focus, they say, should be on improving environmental regulations worldwide rather than on defending the advances in this country.

With administration assurances that the concerns about labor and the environment had been heard, "fast track" was passed by Congress. The administration is working vigorously to lead the world into a golden age of free trade.

Since even the critics of GATT and of the agreement with Mexico have accepted free trade as an ideal, the real issue has not yet been discussed. Few have asked the fundamental questions: Is free trade desirable in general? When trade is "free," who is "free" from whom? What are the results of free trade, and do we favor them?

Free trade is the freedom of individuals or firms to exchange goods without governmental interference. Yet even a purely laissez-faire system requires government to enforce contracts, protect private property, prevent fraud, produce public goods such as defense and roads, and protect third parties from "externalities" such as pollution and public hazards. Moving beyond laissez-faire, democratic governments have also formed safety nets for those who cannot compete effectively, regulated workplaces to protect worker safety, and guaranteed universal access to education and health services.

Within the confines of a political jurisdiction (a nation), commerce occurs under the terms set by the government. As long as the government is not heavily involved in setting prices or in producing goods and services from a monopoly position, we might reasonably say the country has a free market. By contrast, free trade involves commerce between entities in separate nations, without government regulation. In the absence of a supra-national government with the power to tax and regulate, free trade moves in the direction of the purest form of laissez-faire capitalism--a condition in which those with large concentrations of capital set the rules of exchange.

Thus, when we ask who is freed by the transition from free markets (within the framework of a legal authority) to free trade (without accountability to any government), the answer realistically today is the transnational corporations. With governments not allowed to inhibit their activities, they can move capital around the world to wherever it can be most profitably invested. When we ask from whom they are free, the answer is political agencies of all sorts.

The result of expanding the size of the market beyond national boundaries is, therefore, a revolutionary change in the relation of economic and political power. Moving from free markets to free trade means transferring control over working conditions, environmental policy, and social welfare from governments to transnational corporations.

Those who are frustrated by inefficient government regulation, subsidies, and pork barrel politics may regard free trade as a way of transcending parochial interests. They argue that markets allocate resources more efficiently than politics. For example, they might point to the fact that Detroit auto makers could no longer resist demands for higher emissions standards when Japanese car companies showed they could meet the standards. Or they might show how agricultural price supports, which subsidize millionaire farmers, waste resources, and lead to depletion of aquifers and soil, could be eliminated by a free trade agreement. In other words, when government protects the interest of one group at the expense of the society as a whole, free trade can dislodge some of these privileges.

Nevertheless, even if nations do not always act in the best interests of their people, they are far more amenable to influence from the public than are transnational corporations. For example, the auto emissions standards to which Japanese manufacturers responded more quickly than American companies were imposed by governments. Free trade would reduce or eliminate the capacity of individual governments to set standards higher than those set internationally.

However enlightened the executive officers of a corporation may be as individuals, they are expected to act, are even morally bound to act, primarily in the interests of their stockholders. A world operated in the interests of the major stockholders of the transnational corporations is not an appropriate goal of national policy. It is not one that deserves the support of the Christian community. Yet because this world is advocated under the rubric of free trade, millions of Christians, and, indeed, the public at large, support the steps that lead toward it.

Why are most people so willing to transfer the controlling power of the planet from governments they can influence to transnational corporations they cannot? It is, of course, because the experts assure them that this is progress and promise that the result will be greater prosperity for all. This promise needs examination.

One argument for free trade between nations is called "the principle of comparative advantage." This argument was formulated by David Ricardo. He showed that even if one country could produce all goods more efficiently than another, it was more profitable for it to concentrate its capital on production of those goods where its comparative advantage was greatest. It could exchange its surplus of those goods for those where its comparative advantage was least. In other words both countries gained when they concentrated their capital in the production of those goods they could produce most efficiently in comparison with the trading partner.

Ricardo's formulation was sound. But Ricardo himself pointed out that the principle applies only when capital remains within the country of origin. Now capital flows unimpeded around the world; so the principle of comparative advantage is no longer applicable. In fact, governments have already sacrificed a good deal of their control over the money supply and interest rates by allowing the international monetary system to become relatively autonomous.

In the absence of the conditions for comparative advantage, the rationale for free trade rests entirely on the principle of specialization and the potential for increased aggregate production. Expanding output promises to increase profits for producers and to provide consumers with a wider range of choices at the lowest possible prices. Yet these gains are offset by losses, which are not shared equitably.

First, free trade tends to concentrate wealth rather than to disperse it. Increased world output will be unevenly distributed within and between countries. Since the transnational market will discourage national efforts to redistribute wealth, the results will be more extreme than in the past. But they will only be the continuation of existing trends. For example, as the U. S. government in the 1980's sought greater market freedom and reduced its concern for redistribution through the tax system, the gap between rich and poor grew. Although total output, income from capital, and consumer choices may have expanded, inflation-adjusted hourly and weekly wages (and thus purchasing power among people who depend on wage income) have declined.

In the Third World the results of development policies geared to the international market are more dramatic in their tendency to concentrate wealth and power. Differential access to credit and markets, for example, means that small farmers and businesses cannot compete with large plantations and corporations that are export-oriented. The subsistence sector of the economy declines. Landlessness and unemployment rise. Free trade reduces the capacity of government to encourage autonomous development.

Second, unrestricted commerce has many effects that are costly and require what economists call "defensive expenditures." The Gross World Product includes both the market activity involved in trade and the defensive costs. For example, the growth of markets everywhere concentrates people in cities. Urbanization necessitates an increase of public expenditures on streets, sewers, schools, police, law courts, and jails. All of this adds to Gross World Product, but it does not improve the economic lot of the people.

Third, the unimpeded market grows at the expense of the environment. It is the nature of this market to exploit natural resources and to pollute the environment. Many careful observers believe that human economic activity is already at an unsustainable level in many parts of the world and even globally, as indicated by global warming. The only institutions capable of reducing production of carbon dioxide and other "greenhouse gases" are national governments. Yet free trade will limit the capacity of individual governments to act. For example, a carbon tax that reduced oil consumption might be deemed an illegal restraint of trade unless it were mandated by some international body.

In order to show that increasing total production does not improve human welfare, we have developed an Index of Sustainable Economic Welfare (ISEW) for the United States. This index considers distribution, defensive expenditures, and the sustainability of the economy, as well as personal consumption of goods and services. From 1951 to 1988, per capita GNP rose from $3741 to $7664, while per capita ISEW rose only from $2793 to $3120. More significant, from 1979 to 1988, per capita GNP rose from $6573.5 to $7664, while per capita ISEW fell from $3525.6 to $3120.

Such figures are, of course, far from precise. Many estimates and projections go into them. But we have no doubt that in the United States sustainable economic welfare is declining while the Gross National Product rises. To adopt policies designed to increase GNP more rapidly while further lowering the sustainable economic welfare of the nation is foolish. While we have no means of calculating analogous figures for the globe, the ecological devastation and increasing suffering of the poor in many parts of the world suggest to us that increased GNP in many Third World Countries is accompanied by increased misery and unsustainability.

There is one other argument common among church people. It is held that free trade is the only hope of the Third World. It is certainly true that now that we have drawn so many nations into the global trading system, destroying their ability to feed and clothe themselves, any curtailment of that system would produce major disruptions. But it is also true that the expansion of the system envisioned in GATT and the agreement with Mexico will produce at least equal disruptions. The question is whether it is better to continue to disrupt life in a way that makes people less and less able to deal with their own problems and meet their own needs, or to begin the painful process of reducing dependence on world markets.

In Latin America and in Africa there are major movements advocating reduced dependence. Latin American economists have described dominant forms of development in terms of "dependency theory." What many Christians in this country celebrate as "interdependence" is recognized there as the increasing one-sided dependence of whole nations on distant centers of economic power over which they have no control. In Africa many agree that it is important that the nations of that continent become more nearly self-sufficient in food production so that they are less dependent on the transnational food conglomerates. A number of Third World countries have already experienced the consequences of the American policy of using food as a weapon. Their leaders foresee that the proposed changes in GATT will only make them more dependent on U. S. agriculture and thus less able to manage their own affairs.

Christians have learned to demystify many features of our world. Many are concerned about what the existing economic order is doing to the poor at home and the neocolonialized nations abroad. What is discouraging is to note how little free trade has yet been demystified and how little connection has been made in people's minds between free trade and the economic injustices of which they are painfully conscious. Unless that connection is made, and made soon, a shift of control to centers of economic power will have occurred that will be almost irreversible. There is still time for a national debate that could affect the final decision of Congress -- but just barely.

Ethics, Economics and Free Trade

Issues of profound ethical import are sometimes put before us as technical economic policies. This is true today with respect to the Uruguay Round proposals for revision of the General Agreement on Tariffs and Trade. They are presented as an extension of free trade, a principle that we have been taught to honor from our childhood. But if fully implemented these proposals will profoundly affect hundreds of millions of lives.

What we read about these discussions does suggest that there are ethical issues involved. The obstacles that the new proposals face are depicted as the expression of narrow vision and corrupt self-interest on the part of small groups who are willing to risk the wellbeing of the whole for the sake of retaining the unjust advantages they now enjoy. It is assumed in almost all the published reports that the wellbeing of the whole will be advanced by extending the scope of free trade. Since this is what the Uruguay Round proposals do, they are affirmed as evidently good. Hence it is the moral responsibility of governments to accept these proposals rather than to heed the protests of those special interests who will be harmed by their implementation.

Even if the issue really were as depicted, that is, the wellbeing of the many versus that of the few, there would be reason for ethicists to examine matters with some care. The suffering of a few million people is not to be taken lightly. For example, the wiping out of the European family farmers, the only people who have thus far protested effectively against the proposed agreement, is surely a social change of such a scope that it should not be treated as a minor loss. Nevertheless, if the issue is as depicted, ethicists will be inclined to support the proposals along with finding ways to ease the adjustment of the family farmers into urban life.

But before such a decision is made, ethicists should look further into what is proposed and into its probable effects. For example, the Uruguay Round proposals include the removal of restrictions on investment and services in the Third World. Currently many countries try to ensure that foreign investment work with local capital in ways that help to build up the economy of the country. Many have regulations that assist the enterprises of their own citizens, especially in the service sector (banks, and insurance companies, for example), to compete with multinational corporations. The new proposals forbid all of these practices, thus insuring that the service sector of Third World economies, like the industrial sector, will be owned and managed by foreigners whose only professional interest is corporate profit. Similarly, a Third World country will not be able to protect its natural resources from international market forces. Any country that fails to abide by these agreements will find its markets closed to its exports.

The negative effects of the proposals extend to the areas of health and environment. For example, the United States now prohibits the use of certain poisons in the production of food. It can also refuse to import food produced with those poisons. Under the new rules it could refuse to import such foods only if a small committee in Rome, noted for its very low standards in such matters, declares the food a hazard to health.

Examples such as these give us a clearer picture of what free trade means. It means that governments can no loner steer economic development within their boundaries. Such development is to be determined by the global market. Capital will flow around the world to those places where it can be most profitably invested. Goods will be sold to the highest bidder. All other considerations will be drastically subordinated. Free trade means also that governments cannot set standards for health and the environment above those of the rest of the world. Otherwise local producers must compete with others who are not regulated in these ways.

As the negative consequences of free trade become more evident, ethicists can begin to ask more critical questions. What does "free trade" really mean? What are its positive values? Are these so important as to justify support despite the losses it entails?

"Free trade" is trade between firms that is free from regulation or interference by governments. Generally the term is used when the trade crosses national boundaries. "Free trade" means that goods, services, and capital can flow across national boundaries as easily as they flow within a single country. Today, concretely, it means that transnational corporations can invest freely where they will and for what purposes they will and that governments give up the right to regulate them. "Free trade" is the means whereby the most important decisions about human welfare are shifted from the political sector to the market, and that means to the major players within the market.

The first step in the argument for free trade is, therefore, the argument for the market economy. History has frequently demonstrated that efforts to guide the economy by bureaucratic decisions break down in inefficiency and delay even if they do not become blatantly corrupt. The collapse of the Eastern European economies has confirmed this lesson in a decisive and unforgettable way. It seems that only the market can make the requisite decisions for the efficient use of resources that leads to an adequate supply of the desired goods.

The second step in the argument is that the larger the market the better. This is based on the evidence that a larger market allows for greater specialization, and specialization makes possible greater efficiency in production. This means that the larger the market the more efficiently capital will be invested and the greater the resultant gross product. The global market toward which the Uruguay Round proposals move us will assure the most rapid possible growth in Gross World Product.

This argument is valid as far as it goes. If the proper goal of policy is to increase total production, then the extension of markets free from governmental interference should be consistently supported. But ethicists must ask whether this goal of increasing the gross product should override all other goals. Among the goals overridden, as illustrated above, are those of the social ideal of the family farm, the desire of Third World peoples to participate in the control of their own destiny, and the right of people to set standards for their own health and environment. Should all of these goals be subordinated to that of increasing gross product?

The ethical argument for a positive answer is that, speaking globally, there is still a woeful shortage of goods, even of necessities. There are hundreds of millions of people living in abject poverty. The global population continues to grow rapidly. Unless gross product grows more rapidly than population, there will not be enough to meet human needs in the future. Those of us whose basic needs and more are comfortably met have no right to place secondary considerations above these primary ones.

But there is a strong counter argument as well. When market forces are not directed by political concern for the poor, they increase the gap between the rich and the poor. Indeed, the poor often become poorer and more numerous. In a global market without political control, the rich nations grow richer and the poor, poorer. The same is true within each nation. What is advocated as free trade involves the removal of political influence from the market. It will not improve the lot of the poor.

Defenders of free trade or the expansion of market size may acknowledge that the market tends to increase the gap between rich and poor. But they argue that it is not the case that the poor become poorer in absolute terms. Instead, even if they benefit less from the increased production than do the rich, they still benefit. As the pie enlarges, even if their share is smaller as a percentage of the whole, it is still larger in absolute terms.

An example will help to clarify the relative strengths of these arguments for and against free trade. Consider what is happening in the United States and Mexico. As trade becomes freer between the two nations, more and more U.S. companies relocate across the Rio Grande where wages are much lower and there are fewer governmental regulations in the interest of health and environment. They then sell their products in the U.S. market, pricing them lower than domestic producers.

This movement of capital out of the United States has a negative effect on wages here. On the other hand, the wages paid to Mexican workers, while very low by our standards are fairly good by theirs, and U. S. capital does employ persons who might otherwise have no job at all. In the long run free trade between the United States and Mexico will tend to equalize wages in the two countries. It can be argued that this is a movement toward global justice.

How is that to be evaluated ethically? Obviously, this involves enormous hardship for U.S. workers. But is this suffering compensated by the gains of Mexican labor? If Mexican labor could be expected to rise toward First World standards, then ethicists might judge that they should support this development and seek to ameliorate the hardship of the labor force in this country.

Let us assume that increasing U.S. investment in Mexico will benefit Mexican labor. The question is, how much? The answer to this question is discouraging. Mexican labor is so abundant, that the movement of more factories south of the border is unlikely to raise Mexican wages above subsistence. This is especially true in a time when technology is continuously reducing the amount of labor required in production. If, in spite of these factors, Mexican wages did begin to rise significantly, the market forces that moved capital to Mexico would move it elsewhere. Thus the rapid decline in the standard of living of U.S. workers will not be compensated by a significant rise in the standard of living of Mexican workers.

Of course, the situation for investors is different. As they are free to seek more profitable investments elsewhere, and as labor costs and governmental restrictions decline at home, their income will rise. In this way the gap between the rich and the poor will grow wider.

Is the increase of Gross World Product the ethical end of policy even though it is accompanied by widening gaps between the rich and the poor? Will it in the end allow for the employment of more people and thus the reduction of utter destitution? Since bureaucratic management of the economy has demonstrated its incapacity, is there really any alternative to pressing forward to a free global market?

This last question is the most poignant and the most urgent for persons who are ethically sensitive. If there is no defensible alternative to a single global market, then ethicists must support this goal while seeking to ameliorate the consequences. Since such amelioration can hardly occur unless there is a political body that has authority throughout the market, those who are ethically concerned will devote their energies to generating stronger international institutions. Since the ethical reason for wanting such governmental authorities is that they may be ameliorate the suffering of the victims of the market, these institutions must be responsive to those who suffer and to those who are concerned for them. Some way must be devised for the expression of these human interests in the selection of the leaders of global organizations. Overall, the move must be toward world government.

If we accept the globalization of the economy, then we must work for globalization of political authority as well. Otherwise we abandon all possibility of ethical influence on those decisions that will be most determinative of human wellbeing. But a question arises here. If we develop a world government for the sake of those who suffer from market forces, would be any way of preventing such authority from coming under the control of precisely those economic interests it would be instituted to monitor? This control of political decisions by economic interests is already a serious problem at the national level. The global level is so remote from ordinary citizens that competition for influence with multinational corporations is unlikely to succeed.

If it is ethically unacceptable to have the world controlled by transnational corporations alone, and if we cannot trust global political authority to represent the interests of ordinary citizens, ethicists are under pressure to devise alternative images of a desirable future. This can be done by focusing on the second of the two steps given above as the argument for free trade. There it was argued that the larger the market the better. The argument is based on the assumption that the greater the increase of gross product the better. But it has already been shown that that argument is weak. The increase of gross product is commonly not associated with improvement in the welfare of the poor. And it is not clear that the increase of the wealth of the rich justifies the many negative consequences already noted as accompanying the extension of the market.

There is another important objection against working primarily for the increase of total production. There is a close connection between growth of this kind and resource exhaustion on the one side and pollution on the other. In general, the more rapid the growth, the faster the exhaustion of resources and the greater the pollution. The qualification "in general" is needed, since there can be carefully directed growth that does not have these effects. But it is just this kind of careful directing of growth by governmental regulations that is excluded by the extension of the free market. The growth engendered by global free trade will be the kind that exhausts resources and pollutes the environment.

The implication of what has been said is that growth of gross product is not necessarily improvement of human welfare. This can be stated more strongly. Per capita gross product is not even a measure of economic welfare. Even the most orthodox economists agree, although both they and government officials often neglect this point in their public communications. Recognizing the difference between gross product and economic welfare, some have developed measures of economic welfare and applied them to the economy of the United States. The results have shown, with some consistency, that welfare has not grown proportionately to per capita GNP in recent decades. Indeed, it seems apparent that growth of GNP can be accompanied by declining economic welfare, especially when the welfare considered is sustainable welfare. (My own participation in the development of such a measure, primarily worked out by Clifford Cobb, can be found in the appendix of For the Common Good, by Herman Daly and myself.) Ethicists should work for policies that enhance human welfare in general and for an economy that enhances economic welfare.

If increase in gross product is not the ethical goal, then there is no ethical reason to increase the size of markets. It is clear that some groups, especially those who live from the investment of capital, will gain by increasing the size of markets and that labor now living above the global subsistence level will lose. All will suffer through the decline in health and environmental protection, the exhaustion of resources, and the pollution of the environment. The ability of people to participate in making the decisions that shape their lives will decline. Ethical considerations, far from supporting free trade, as is still generally supposed, count strongly against it.

The alternative to free trade is a system of relatively self-sufficient markets in relatively small regions. In each of these regions the community can organize to express its concern for all its members through political and social institutions. There would be a market economy rather than central planning, but the community would establish rules, applied equally to all the players in the market, designed to support the public good in health, environmental wellbeing, and the conditions of labor. Those who played by these rules would not be forced to compete with other producers who played by less demanding rules in other markets. Of course, the market would need to be large enough to insure competition in as many types of business as possible. Where that is not possible, business would be closely regulated or even owned by the community. The ability of ordinary people to participate in important decisions at this level is incomparably greater than their ability to participate in global government.

In a world like this there could be trade that is in fact much freer than what is now called free trade. Today free trade means the freedom of multinationals from governmental interference. The effect on people everywhere is to make them dependent for their very existence on a trade whose terms are set by others. They are not free not to trade and hence must trade on whatever terms are imposed on them. In the scenario here proposed, each community would be free to trade or not to trade as it chose. It could survive without trade. Therefore, it would trade only when the terms of trade were advantageous to it.

Since there are many issues that cannot be dealt with at the local level, these relatively self-sufficient communities would organize themselves into communities of communities, and these into communities of communities of communities up to the global level. No local community should be free to export its pollution to others or to exclude minority groups from participation in its own life. Communities of communities would require considerable power in order to enforce such rules. More power is needed at the global level, for example, to enforce decisions of the World Court and of the United Nations. The goal is not a return to political isolationism. But the ideal is that free people would participate in shaping the conditions within which free markets operate, and that they freely determine when trade is advantageous to them. Political institutions should retain power over economic ones even if they choose to give free reign to market forces within the community. In such a world, communities could measure their economic wellbeing by whether the basic needs of all citizens are met rather than by the growth of their product. That is a far more ethical approach.

I have approached the topic of ethics and economics above by an example rather than in a more abstract and theoretical way. I have done this because I believe that ethics loses significance when it is not engaged with the urgent issues of the day. However, no example of ethical engagement with economics touches on all the important topics that are properly involved in their interaction. I will conclude with a few more abstract comments.

1. Although there are features of economic theory that are "purely" scientific and value neutral, they are embedded in a wider context that is loaded with value judgments. The one that has played the largest role in the discussion above is that increased production is inherently desirable. A second, also involved in the discussion above, is that economics as economics does not judge some forms of production and consumption preferable to others. It does not matter for economics as now understood whether what is produced meets the desires of the rich for luxuries or the needs of the poor for survival. Economists believe that their "value neutrality" requires them to take this position, but it has the effect of encouraging market operations that increase inequality, and of discouraging public policies aimed at meeting basic needs. Similarly, it does not matter whether what is produced is in fact good for the consumer. Economists call for "consumer sovereignty." The relative value of tobacco and spinach is decided by market prices, not by their respective contributions to health. Ethicists are likely to bring other considerations to bear.

2. Consumption of goods and services is treated as the primary good to the exclusion of the positive values of community life. The application of the theory that is guided by this value system has the consistent effect of destroying the community it does not value. This is manifest in what has happened to rural America in the past four decades. It is also manifest in the numerous factory closings that have removed the economic base of hundreds of urban communities and broken the back of the American labor movement. The argument against free trade above is made in the name of community against undifferentiated consumption of goods and services as the sole end of economic activity.

3. The application of market principles to society requires the rapid mobility of both capital and labor. This makes the maintenance of stable communities impossible. The absence of stable communities makes it difficult to transmit adult values to youth who are then chiefly formed by an ever changing youth culture. The educational system that is supposed to provide the "human capital" needed by the market inevitably deteriorates despite increasing expenditures on schools. Without a strong influence of stable community on youth and without community support of schools, many youth graduate from high school without basic skills and without habits of disciplined work. In this way the economy undercuts itself.

4. The view of rationality in economics is unethical. Rationality is identified with self-interest. Concern for fairness and for upbuilding community is not viewed as rational within the system. The result is that the more people are affected by the study of dominant forms of economic theory, the less they are likely to be interested in fairness, in community wellbeing, and even in honesty. Unfortunately, an increasing portion of the business community has been socialized into thinking in economic ways. This also weakens the market, which depends for its healthy functioning on the integrity of the players. As individuals are increasingly persuaded that rationality consists in private self-interest, the firms that employ them suffer as well.

The time is long past when ethicists could take economic theory as a given and deal only with the secondary questions raised by its application. Ameliorating the negative effects of the system that expresses the values built into the theory does not suffice. Ethicists should challenge these values and work with economists in reconstructing the theory itself.