Genevieve Simms
When the going gets tough the tough cave in
It’s when faith becomes dogma that things inevitably go wrong.
Faith is belief without the existence of observable testable proof. You want to believe Jesus was the son of God? That’s fine: no one can prove otherwise. Dogma is belief that is contrary to observable testable proof. You want to deny evolution in favour of creationism? Sorry: 150 years of rigorous investigation has challenged refined and finally upheld the basic premise that Darwin put forward in The Origin of Species in 1859.
And so it is with the reaction to the current economic crisis that last week saw stock values continue their worldwide tumble on a scale unseen since the 1930s.
For three decades now the heart of the neo-conservative revolution pioneered by the likes of economist Milton Friedman British Prime Minister Margaret Thatcher and U.S. President Ronald Reagan has been a faith in three core concepts.
First taxes are bad and should be reduced or eliminated wherever possible. Second deficits are evil and should be avoided at all costs. Third only the free market can determine the true exchange rate of any commodity or service and should therefore be trusted to do its job unregulated and unsupervised.
As a faith this was fine. Economists and the politicians they influence have always differed in their beliefs. Neo-conservatives — or more accurately retro-Liberals — were not wrong in placing their trust in this holy trinity of concepts any more than Karl Marx and his latter-day disciples were wrong to insist that all history was the history of class struggle. In each case the belief was simply a way of approaching and understanding the world for the purpose of creating a responsive policy or program of action.
However faith was not enough it seems. At the peak of the neo-con mania in Canada governments were even prepared to make one of their core beliefs — the sin of deficit — a criminal offence. In 1999 for example Mike Harris’s Conservative government in Ontario passed legislation making it illegal for any future government to operate in the red. “ We have passed historic legislation” Harris proudly declared that “no government this century or [the] next century this millennium or the next millennium can ever again rip off the taxpayers the way the Liberal Party and the New Democratic Party did in this province.”
Here’s where faith became dogma. It’s one thing for a government to pursue its own agenda no matter how wrong-headed its critics may believe it to be. It’s another thing however to assume the mantle of omniscience and declare that for all time future governments may not exercise the freedom to pursue alternative agendas.
Like all dogmas faith in the evils of deficit-financing and the ability of free markets to regulate themselves never really amounted to true policy anyway. Government policy is — or should be — the result of empirical analysis of data reflective interpretation of that analysis and measured consideration of available alernatives. Unbridled trust in the free market never passed any of these basic tests. Rather it was simply an article of faith that rested on well faith not facts.
As long as this faith delivered results then its supporters saw no reason to examine (let alone question) its underlying rationale. Yet now with everyone from John McCain to Stephen Harper to George W. Bush prepared to revive the practice of government deficit on a historically unprecedented scale it’s fair to question the strength of that faith in the first place.
Take the case of Alan Greenspan head of the U.S. Federal Reserve for more than 20 years. Last week he confessed that he was “partially wrong” in believing that the debt practice of derivatives needed no regulation and admitted that “I do not fully understand why it [the economic meltdown] happened.”
Put bluntly it’s easy to maintain faith in any belief system as long as it’s working. The true test of faith comes when its core assumptions and values are tested. That’s why the biggest news story of the past two months isn’t the worldwide financial crisis itself but the cowed flight of neo-cons from the Friedman school of free-marketry to the interventionist home of John Maynard Keynes who long ago argued that governments should tax in good times and run deficits in lean times in order to avoid wild economic fluctuations such as we’re seeing now.
This prompts two basic observations. First it’s now painfully obvious that the policies pursued by neo-conservative governments in Britain America Canada and elsewhere were not policies at all but simply habits. Habits such as allowing banks and other institutions to lend money they didn’t have to people who couldn’t repay the loans or borrowing from the future to pay for tax cuts and military ventures in the present.
Second politicians and the mainstream media have portrayed the current crisis as something of an aberration: that a system otherwise sound has delivered a shocking blow to the world. This is rubbish. Victims of the neo-con faith in the sanctity of the free market began to pile up back in the late-1970s. Count among them trade unionists the unemployed the poor the mentally ill immigrants single parents the poor the homeless — all these groups and no doubt others were denied what Liberal leadership hopeful Michael Ignatieff once called “the needs of strangers” and instead were sacrificed on the altar of the new faith.
Capitalism’s strength has always been that it gets the job done. Its weakness is that it has never cared who gets hurt in the process. Till recently it was possible — easy even — to ignore the cries of those who suffered from its Scrooge-like indifference. Now that million-dollar mortgage-holders and middle-class investors have joined the ranks of suffering faith in the free market is facing its greatest test of faith to date.
