Tuesday, July 12, 2011

"The faith-based economy" (15 Oct 2008)

Via 3QD comes this intriguing essay by Arjun Appadurai about the role of faith in capitalism.
we are in a new Weberian moment, where Calvinist ideas of proof, certainty of election through the rationality of good works, and faith in the rightness of predestination, are not anymore the backbone of thrift, calculation and bourgeois risk-taking. Now faith is about something else. It is faith in capitalism itself, capitalism viewed as a transcendent means of organizing human affairs, of capitalism as a theodicy for the explanation of evil, lust, greed and theft in the economy, and of the meltdown as a supreme form of testing by suffering, which will weed out the weak of heart from those of true good faith. We must believe in capitalism, in the ways that the early Protestants were asked to believe in predestination. Not all are saved, but we must all act as if we might be saved, and by acting as if we might be among the saved, we enact our faith in capitalism, even if we might be among the doomed or damned. Such faith must be shown in our works, in our actions: we must continue to spend, to work hard, to invest, and, as George Bush long ago said, “to shop” as if our very lives depended on it. In other words, capitalism now needs our faith more than our faith needs capitalism.
Capitalism no longer has to justify itself through its efficacy; we are simply supposed to believe in market magic, which tests our individual worthiness by requiring us to believe -- to trust and take on debt and spend -- whether or not we ultimately profit from it. The faith alone is presumed to be edifying, its own reward. This faith, which we the subjects of capitalism must demonstrate, is different from the trust required by capitalism's high priests -- the financiers who fuel its wondrous achievements. That has broken down, and the state is laboring to rebuild it -- it remains to be seen whether trust can be compelled with a mountain of money. But in the process of chasing risk to enhance yields in the past decade, prompting ever more opaque means of risk management, capitalism took on further religious overtones. Derivatives worked not because anyone could explain the mechanism but because investors seemed simply to accept them as truth, especially since the initial outcomes were favorable. Appadurai mentions "re-enchanted capitalism," alive with the sort of faith sociologists once expected its rational underpinnings to obviate. Instead, As Appadurai explains, we are not trying to rescue capitalism by ending superstition and letting economics work scientifically, but instead we are taking measures to restore faith, to encourage the belief in belief despite economic fundamentals.
The appetites of the beast require restoring uncertainty to its more calculable form as risk, as a first step in restoring trust between lenders, so that they will move money to yet others, so that in turn the wheels of commerce can begin to turn and our faith in the eternal mysteries of capital can be restored. Among these are the mysteries of debt as the virtuous bride of consumption, money as capable of begetting more money, and profit for the few as the key to the welfare of all. The cardinal mystery of the market, of course, verily its Spirit, is the Invisible Hand. For the Invisible Hand to move again, it needs a Helping Hand from us, the wretched of Main Street. And in lending this helping hand, in the biggest bailout in human history, we are asked to show our Faith in the Economy. For once, and perhaps for the last time, capitalism needs our Faith as much as we need its mysteries. The global economy will never be secular again.

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