Lok Sabha passes 8 bills in 17 minutes without debate

Amid din, LS passes 8 bills in 17 minutes without debate 24 Dec 2008, 0640 hrs IST, TNN

NEW DELHI: For the last two days, as the much-extended special session of parliament called for the Manmohan Singh government's July 22 trust vote drew to a close, a flurry of bills - four on Monday and a staggering eight in 17 minutes on Tuesday - were passed even as the Lok Sabha was frequently in disorder. On Tuesday afternoon, when BJP MPs stormed the well rejecting the government's statement on minority affairs minister A R Antulay's demand that the shooting of ATS chief Hemant Karkare should be probed, the chair quickly took up pending legislation which had swelled to nine from the five listed at the start of the day. With just one session of the current Lok Sabha to go in February-March, this week's proceedings marked yet another low for parliament. The Times of India has consistently reported on the absence of debates and the decline in sittings. In its report on October 21 this year, TOI had pointed out that parliament had met only 32 days this year and the expectation that it should meet for a minimum of 100 days was not going to be met by a long margin. Looking at past years, the Lok Sabha met for as many as 151 days in 1956, and just 98 and 109 days in 1976 and 1985, respectively. In 1999, it had met for 51 days. The procedure adopted on Tuesday was quite irregular as MPs complained that additional bills, pushed in as the supplementary list of business, were not circulated, while legislation was not discussed at all. In fact, amid the tremendous din in the House, it was barely possible to track which bill had been passed expect by keeping an eye on the minister rising in response to the chair. Speaker Somnath Chatterjee, who had conducted proceedings since the morning, was absent when the House met at 2pm and, as was the case on Monday, deputy Speaker Charanjit Atwal simply ignored the tumult and went ahead with the legislative business. As it became apparent that the government was moving bill after bill, enraged Left MPs rushed to the chair in protest. Left MPs N N Krishnadas and Sunil Khan gesticulated at the chair demanding that the proceedings be halted until they were hauled back by CPM deputy leader Mohammed Salim. The Left MPs then stood in a group and tore copies of the bills in their possession and flung them around in order to underline the mockery of parliamentary practice. All along, BJP MPs kept up a steady chorus of anti-Antulay slogans. The bills rushed through the Lok Sabha on Tuesday were on the Post-Graduate Institute of Medical Education and Research, Chandigarh, amendments to the Prevention of Corruption Act, Agricultural and Processed Food Products Export Development Authority Amendment Bill, Compensatory Afforestation Act, Constitution (Scheduled Tribes) UT Order (Amendment), South Asian University Bill, Code of Criminal Procedure Amendment Bill and Collection of Statistics Bill. Later, BJP spokesperson Shahnawaz Hussain said a ninth bill, High Court and Supreme Court Judges Salaries and Conditions of Service Bill, could not be taken up as law minister H R Bhardwaj was not in the House. However, ministry officials said a junior minister had been deputed but the bill was not taken up by the chair. What shocked MPs was the sheer opportunistic manner in which four bills were brought onto the list of business at the last minute. On Monday, for a full 26 minutes, as the BJP MPs were yelling their lungs out in the well, telecom minister A Raja moved the Information Technology Amendment Bill clause by painful clause. A little earlier, railway minister Lalu Prasad moved the Appropriations Bill for his ministry. Other legislation to be passed included the Gram Nyayalaya Bill and the Prevention and Control of Infectious Diseases in Animals Bill. By any standard, passing 12 bills in two days is a mammoth task even if the House had decided to sit late into the night. Even the most innocuous of bills attracts a dozen-odd speakers and often a couple of hours of discussion can be expected. On Tuesday, ministers who had spent the morning in their offices in the Lok Sabha being briefed by officials had nothing more to do than move bills in the House. Parliament has met irregularly during the current Lok Sabha, often due to political blockades and sometimes, as in the case of the just-concluded session, to avoid the possibility of a no-trust vote being moved by the opposition. And while the sittings have declined, the practice of passing bills when the House is in disorder has almost become a norm - a precedent that many MPs feel bodes ill for the health of parliament.

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Economics as Pseudoscience

 By The Mogambo Guru

Around here, Today's Big Burning Question (TBBQ) is "Will the stupid Mogambo ever shut up and actually get any work done?" while I am consumed with my own version of TBBQ, which is "Can the Federal Reserve continue to lower interest rates forever, to zero and beyond, perhaps to negative infinity?"

You will probably agree with me that "negative interest rates" is a very interesting theory, as is "negative infinity" and the concept of a totally flat yield curve where all interest rates for every maturity period, from three-month T-bills to 30-year bonds, all pay the same interest rate! Weird stuff!

Obviously, it is something that we would have hoped would be delved into more deeply, as the headline "Treasury Curve Flattens on Speculation Fed May Go Beyond Cuts" seems to so richly imply.

Alas, it was not to be, and thus the fascination of theoretical "negative interest rates" remains just another amazing artifact of mathematics, like the artificial "consumption function" that is at the root of the econometric neo-Keynesian crapola that is practiced by Ben Bernanke of the Federal Reserve to actually try and guide monetary policy, which they have done to such disastrous consequences, and which is a theory that was previously taught by him as the actual head of the economics department of Princeton University, where nobody in the math department or the history department ever questioned him, his ridiculous theories, or even said, "You must be some kind of moron to think the stupid equation-laden crap coming out of your stupid mouth is real economics, when any semi-literate halfwit can see that the Classical and the Austrian schools of economics are obviously right, whilst you low-wattage 'constant stimulus via deficit spending' morons are going to destroy the dollar and the US economy with your econometric insanity!" which, I think, says all you need to know about the intellectual prowess of Princeton University.

Instead of helping me shame Princeton for promoting the equivalence of astrology as a science and how America is now ruined for it, I found that I had accidentally missed the whole point of the article, and the headline "Treasury Curve Flattens on Speculation Fed May Go Beyond Cuts" was significant in that the important point was that the Fed "may go beyond cuts" in interest rates, and that Ben Bernanke admitted that "there was limited room to lower rates", and now has "suggested" that "the central bank would consider buying Treasuries to prevent yields from rising"!!

Notice the part at the end where I added the two exclamation points as my clever non-verbal editing way of saying, "The freaking Federal Reserve is creating money and credit for its own use so that it can buy increasing amounts of newly-issued Treasury bonds for itself, and other securities and assets, in order to manipulate the supposed free market while giving the government oodles and oodles of new money to spend because the Congressional lowlife morons have now spent us into the grave and are so panicked that they will reflexively respond with MORE deficit-spending for the Federal Reserve to finance by creating the money and credit to pay for it, which will cause inflation and economic distortions a-plenty!!!"

Notice again the use of, not two, but three exclamation points, which is again my clever non-verbal editing way of saying, "I am freaked out at the blatant corruption and fraud that is happening right in front of our noses by Wall Street, Congress and the Federal Reserve, and people ought to be sending me money with which to do emergency research into animating the dead so as to raise an Army of the Undead to descend upon Washington, DC, and eat the brains of anyone tainted with the stench of Congress and the Federal Reserve!"

Mr Bernanke is apparently not afraid of my threats of mobilizing an army of vengeful zombies to send against him and his loathsome ilk, and ignoring me completely, defiantly said that one option open to the Fed is to buy "longer-term Treasury or agency securities on the open market in substantial quantities", which seems really odd, coming as it does at the same time as "International investors purchased a net US$34.6 billion of Treasury notes and bonds in October, compared with purchases of $20.7 billion a month earlier."

Or maybe it isn't odd, as "Investors sold US stocks, corporate bonds and a record amount of debt issued by mortgage-finance companies Fannie Mae and Freddie Mac and other agencies, according to the Treasury."

Bloomberg quoted Suvrat Prakash of BNP Paribas Securities saying that "There is still a lot of demand for assets at these yields. Whenever risky assets are performing as badly as they are now, you see people flock to safe assets."

Safe? Did he say safe? Hell, yes, it's safe! It's as safe as any fiat currency can be; if the government needs a little money to pay you back, it merely gets its central bank to create some credit in the banks from thin air, which becomes money when somebody borrows the money to buy the government debt! Hahahaha! What a racket!

So, since all the world's currencies are now fiat currencies, and they can all be easily inflated by infinite amounts until they are as worthless as a Zimbabwean dollar, thus they are all equally as safe and ultimately as valuable, too! Hahahaha!

About this time, you would normally expect me to switch to a rant on why this means that you should be buying gold, silver and oil, and indeed all commodities, but I will not, as your mere expectation proves that you understand this stuff perfectly!

I am very proud of you, my darling Junior Mogambo Ranger (JMR)!

Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter - an avocational exercise to heap disrespect on those who desperately deserve it.

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Merry Xmas - An article on "Police State Britain"

 The Paranoia Squad

A British police unit is demonising peaceful protesters to stay in business. For how much longer will the government permit the police forces to drum up business like this? And at what point do we decide that this country is beginning to look like a police state?

GEORGE MONBIOT

When you hear the term "domestic extremist", whom do you picture? How about someone like Dr Peter Harbour? He's a retired physicist and university lecturer, who worked on the nuclear fusion reactor run by European governments at Culham in Oxfordshire. He's 70 next year. He has never been tried or convicted of an offence, except the odd speeding ticket. He has never failed a security check. Not the sort of person you had in mind? Then you don't work for the police. Dr Harbour was one of the people who campaigned to save a local beauty spot � Thrupp Lake - between the Oxfordshire villages of Radley and Abingdon. They used to walk and swim and picnic there, and watch otters and kingfishers. RWE npower, which owns Didcot power station, wanted to empty the lake and fill it with pulverised fly ash(1). The villagers marched, demonstrated and sent in letters and petitions. Some people tried to stop the company from cutting down trees by standing in the way. Their campaign was entirely peaceful. But RWE npower discovered that it was legally empowered to shut the protests down. Using the Protection from Harrassment Act 1997, it obtained an injunction against the villagers and anyone else who might protest. This forbids them from "coming to, remaining on, trespassing or conducting any demonstrations or protesting or other activities" on land near the lake(2). If anyone breaks this injunction they could spend five years in prison. The act, parliament was told, was meant to protect women from stalkers. But as soon as it came onto the statute books, it was used to stop peaceful protest. To obtain an injunction, a company needs to show only that someone feels "alarmed or distressed" by the protesters, a requirement so vague that it can mean almost anything. Was this an accident of sloppy drafting? No. Timothy Lawson-Cruttenden, the solicitor who specialises in using this law against protesters, boasts that his company "assisted in the drafting of the … Protection from Harassment Act 1997″(3). In 2005 parliament was duped again, when a new clause, undebated in either chamber, was slipped into the Serious Organised Crime and Police Act(4). It peps up the 1997 act, which can now be used to ban protest of any kind. Mr Lawson-Cruttenden, who represented RWE npower, brags that the purpose of obtaining injunctions under the act is "the criminalisation of civil disobedience"(5). One of the advantages of this approach is that very low standards of proof are required: "hearsay evidence … is admissable in civil courts". The injunctions he obtains criminalise all further activity, even though, as he admits, "any allegations made remain untested and unproven."(6) Last week, stung by bad publicity, npower backed down. The villagers had just started to celebrate when they made a shocking discovery: they now feature on an official list of domestic extremists. The National Extremism Tactical Co-ordination Unit (NETCU) is the police team coordinating the fight against extremists. To illustrate the threats it confronts, the NECTU site carries images of the people marching with banners, of peace campaigners standing outside a military base and of the Rebel Clown Army (whose members dress up as clowns to show that they have peaceful intentions). It publishes press releases about Greenpeace and the climate camp at Kingsnorth(7). All this, the site suggests, is domestic extremism. NECTU publishes a manual for officers policing protests. To help them identify dangerous elements, it directs them to a list of "High Court Injunctions that relate to domestic extremism campaigns", published on NECTU's website(8). On the first page is the injunction obtained by npower against the Radley villagers, which names Peter Harbour and others.Dr Harbour wrote to the head of NETCU, Steve Pearl, to ask for his name to be removed from the site. Mr Pearl refused. So Dr Harbour remains a domestic extremist. It was this Paranoia Squad which briefed the Observer last month about "eco-terrorists". The article maintained that "a lone maverick eco-extremist may attempt a terrorist attack aimed at killing large numbers of Britons."(9) The only evidence it put forward was that someone in Earth First! had stated that the world is overpopulated. This, it claimed, meant that the movement might attempt a campaign of mass annihilation. The same could be said about the United Nations, the Optimum Population Trust and anyone else who has expressed concern about population levels. The Observer withdrew the article after NETCU failed to provide any justification for its claims(10). NETCU now tells me that the report "wasn't an accurate reflection of our views"(11). But the article contained a clue as to why the police might wish to spread such stories. "The rise of eco-extremism coincides with the fall of the animal rights activist movement. Police said the animal rights movement was in disarray" and that "its critical mass of hardcore extremists was sufficiently depleted to have halted its effectiveness."(12) If, as the police maintain, animal rights extremism is no longer dangerous, it is hard for NETCU to justify its existence: unless it can demonstrate that domestic extremism exists elsewhere. A better headline for the article might have been "Keep funding us, say police, or civilisation collapses." NETCU claims that domestic extremism "is most often associated with single-issue protests, such as animal rights, anti-war, anti-globalisation and anti-GM crops."(13) With the exception of animal rights protests, these campaigns in the UK have been overwhelmingly peaceful. As the writer and activist Merrick Godhaven points out, the groups whose tactics come closest to those of violent animal rights activists are anti-abortion campaigns(14). The UK Life League, for example, has published the names and addresses of people involved in abortion and family planning(15,16). Two of its members have been convicted of sending pictures of mutilated foetuses to doctors and pharmacies(17). Anti-abortionists in the US have murdered doctors, nurses and receptionists. Yet there is no mention of the UK Life League or anti-abortion campaigning on the NETCU site. This looks to me like partisan policing. Just as the misleading claims of the security services were used to launch an illegal and unnecessary war against Iraq, NETCU's exaggerations will be used to justify the heavy-handed treatment of peaceful protesters. In both cases police and spies are distracted from dealing with genuine threats of terrorism and violence. For how much longer will the government permit the police forces to drum up business like this? And at what point do we decide that this country is beginning to look like a police state? www.monbiot.com References: 1. saveradleylakes.org.uk/ 2. The High Court of Justice. Order arising from Case HQ07X00505. para 6.4. netcu.org.uk 3. lawson-cruttenden.co.uk 4. Sections 125-127. opsi.gov.uk 5. Timothy Lawson-Cruttenden, 2007. Injunctive Relief Against Harassment and trespass.Case Commentaries, p194. Environmental Liability. 6. ibid. 7. netcu.org.uk 8. NETCU, November 2007. Policing Protest: pocket legislation guide, p51. It can be viewed here: indymedia.org.uk 9. Mark Townsend and Nick Denning, 9th November 2008. Police warn of growing threat from eco-terrorists. The Observer. 10. Stephen Pritchard, 23rd November 2008. Anonymous sources and claims of eco-terrorism. The Observer 11. NETCU, pers comm, 22nd December 2008. 12. Mark Townsend and Nick Denning, ibid. 13. netcu.org.uk 14. Merrick Godhaven, 15th November 2008. Civil Disobedience is a Terrorist Threat. UK Watch. 15. Leading article, 12th March 2006. Email campaigns. The Observer. 16. Linda Harrison, 9th July 2001. Anti abortion activists step up UK Net campaign. theregister.co.uk 17. Jeremy Laurance, 8th May 2006. Anti-abortionist jailed for photo protest. independent.co.uk

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Can You See The Fog?

  

Links between financial crises and recessions are unalterably vague

KAUSHIK BASU

Until a few weeks ago there was no agreement among experts on whether or not a recession was imminent. Then last week, America's National Bureau of Economic Research—widely viewed as the final arbiter on such matters—declared that the recession is here. Not just that, it started in December 2007. So a recession, it seems, is not only unpredictable, but also cannot always be recognised when present. Clearly, this is not the high point of the economics profession. The fact that this financial crisis came upon us with so little forewarning has led to a lot of criticism of economics as a discipline. Some of the criticism is valid, but not all. First, it needs to be appreciated that in economics a prediction itself can alter the object of the prediction. Hence, for certain kinds of economic phenomena, forecasting may be a logical impossibility. Consider predicting a fall in stock prices one month in advance. If anyone can actually master the art of doing this, then, as soon as the person makes this forecast, people will sell their shares and prices will come down immediately. So no one can have a reputation for predicting share price declines well in advance. Second, in these troubling times, the demand is for economists who do not temporise but make clear statements, who do not waver about the causes of the crisis but are unequivocal. This, however, is the wrong lesson. I am currently reading Jean-Jacques Rousseau's autobiography, Confessions. Poor fellow. When at last, in his late forties, he makes it as a man of letters, music composer, trenchant critic of 18th century European mores and, above all, the grand philosopher, his bladder gives way. Page after page, he laments about poor "urine retention" and how he cannot accept invitations from kings and dukes for fear that he may have to run, mid-conversation, to the loo. He sees the best doctors of France and Geneva. The medical diagnoses that follow (and are described in some detail) remind me of the pronouncements on the current crisis by finance experts. Notwithstanding the primitive knowledge of human anatomy, Rousseau's doctors prescribed confidence treatments that had no scientific basis. The correct stance in such situations is to recognise that we do not understand. So for economists, now is the time to be sceptical and to question. Fortunately, scepticism is the mainspring of knowledge. It may not be entirely coincidental that at the same time that contributions to knowledge in ancient Greece peaked, the philosophy of scepticism was also at its height. Pyrrho of Ellis (circa 300 BC), the "apostle of disillusionment", lectured on the value of equivocation. Pyrrho's disciple, Timon, wrote about the essential ambiguity of nature. Later, circa 200 AD, Sextus Empiricus penned a series of books challenging traditional knowledge. This is clear from the titles of his many books—Against Dogmatists; Against the Physicists; Against the Ethicists; Against the Professors. He wrote more, but you get the point. In economics the big open question is the connection between financial assets and the real economy. If one million rupee notes owned by a businessperson burns down, what will happen to the total amount of apples, homes and haircuts in the economy? Not only do we not have an answer to this question, we do not even have a methodology for answering it. Till we get to grips on this, the link between financial crises and recessions will remain ambiguous. In this age of quick claims and hasty recognitions, our urge is for quick assertions. However, 'social phenomena' are inherently ambiguous. To ignore this is to court failure. Postscript: Tenuous though its links may be with science and scholarship, and feeble though it may be in humour, let me end with the best account of ambiguity that I have heard.It consists of a husband's remark and how one may interpret it. After a lady was declared dead and was being carried out of the house in a coffin, the pall-bearers bumped into a wall, whereupon they heard a groan. The coffin was promptly set down and, lo and behold, the lady had not died. She was taken out and nursed back to health. Ten years passed, and then she died. Her corpse was placed in a coffin; and, as the pall-bearers carried it out, they heard her husband's anxious voice, "Mind the wall". (Kaushik Basu is Chair and C. Marks Professor, Department of Economics, Cornell University)

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Financial crisis: Bank of England 'did not understand problem' 

• Julia Kollewe
• guardian.co.uk, Monday 22 December 2008 08.26 GMT

 

The Bank of England underestimated the severity of the current financial crisis, according to its deputy governor who has admitted that interest rates are only a "blunt instrument" with which to control the economy.
 

Sir John Gieve told the BBC's Panorama programme, to be screened tonight, that new tools are needed to complement rates. He also admitted that the Bank knew "crazy borrowing" was taking place and the price of houses and other assets was rising unsustainably, but did not fully understand the problem.

 
"We didn't think it was going to be anything like as severe as it's turned out to be," says Gieve, who is in charge of financial stability at the Bank. "Why didn't we see that it was so serious? I think that's because we, perhaps, we hadn't kept pace with the extent of globalisation. So the upswing here didn't involve the big increases in earnings and consumption and activity which we saw in previous booms. We saw the credit, we saw the house prices, but we did see a fairly stable pattern of earnings, prices and output."

 
Explaining why the Bank did not raise interest rates to curb the lending and house price boom, Gieve says: "If we'd used interest rates to try and address this asset-price credit growth, we would have been holding down the level of activity elsewhere in the economy, in manufacturing, in other services, holding down the level of employment at a time when consumer price inflation and earnings were stable and reasonably low. And people would have said, you know, 'this is a wilful reduction in the prosperity of the country'."

 
The Bank cannot just rely on interest rates to control the economy, he argues. "One of the main lessons from this is that we need to develop some new instruments which sit somewhere between interest rates, which affect the whole economy and activity, and individual supervision and regulation of individual banks," Gieve says.

 
"Maybe we need to develop something which bridges that gap and directly addresses the financial cycle and prevents the financial cycle and the credit cycle getting out of hand ... I think we need to complement interest rates, which are a blunt instrument - you set one interest rate for the whole economy - with something which is more financial-sector specific."

 
"This is a major storm we haven't seen the like of for 100 years," he adds. "It would be very surprising if we weren't learning lessons from it and we are."

Gieve also casts doubt on whether the Treasury will get all of the money back that it has poured into the banking sector, pointing to a "level of defaults" in the books of nationalised lenders Northern Rock and Bradford & Bingley, which are now held by the taxpayer.

 
Speaking on the same programme, John Varley, the chief executive of Barclays, predicts that consumers and businesses will struggle to access credit for the next one to two years.

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No Houris Inside Our Jails - Why Kasab must have legal defence and why he mustn't hang

 

Ram Jethmalani

Mohammad Ajmal Amir Kasab does not need a lawyer; someone in this country needs a client. That's why some lawyers seem to be amusing themselves imagining that Kasab sought their services and that they declined only to oblige Mother India. In medieval times, witches were feared, despised and burnt by furious mobs. They never got a fair trial; no one dreamt of giving them one. Prejudice and irrational fear ensured that they got nothing but undeserved punishment. In modern society, the "spy" has taken the place of the witch, with one vital difference. The danger so-called witches posed was entirely imaginary. Some spies do pose a threat. But to argue that a crime is so vile and dastardly that an accused must not be allowed to demonstrate his innocence is bad law. The measure of a civilisation is the way its society treats those it hates. It is the duty of every lawyer to defy a bar association resolution that a particular accused should not be defended. So important is the right of an accused to have the services of a lawyer that our constitution-makers were not satisfied with the right to defence created by criminal law. They made it a fundamental right so that no tyrannical regime could curtail or destroy it. Article 22 declares that no accused shall be denied the right to consult and be defended by a legal practitioner of choice. And the 42nd Amendment of the Constitution, carried out during the Emergency, introduced at least one wholesome provision. The newly-added Article 39-A mandated that the legal system shall provide free legal aid to ensure that opportunities for securing justice are not denied to any one by reason of economic or other disabilities. When Thomas Paine was jailed and tried for treason for his pamphlet Rights of Man, the great advocate Thomas Erskine was briefed to defend him. Erskine, at that time, was the attorney-general for the Prince of Wales. Though he was allowed private practice, he was warned that if he accepted Paine's brief, he would be dismissed from office. Undeterred, Erskine accepted the brief and was deprived of office. His immortal words, which the editor of Howell's State Trials printed in capitals, stand out as a shining light: "From the moment that any advocate can be permitted to say that he will or will not stand between the Crown and the subject arraigned in the Court where he daily sits to practice, from that moment the liberties of England are at an end. If the advocate refuses to defend from what he may think of the charge or of the defence, he assumes the character of the Judge; nay he assumes it before the hour of judgement; and in proportion to his rank and reputation puts the heavy influence of perhaps a mistaken opinion into the scale against the accused in whose favour the benevolent principle of English law makes all assumptions, and which commands the very Judge to be his Counsel." Indian lawyers have followed this great tradition. The Razakars of Hyderabad were defended; Sheikh Abdullah and his co-accused were defended; and so were some of the alleged assassins of Mahatma Gandhi and Indira Gandhi. No Indian lawyer of repute has ever shirked responsibility on the ground that it will make him unpopular or affect the electoral prospects of his party. The Bar Council of India has also formulated standards of professional conduct. Among other things, the resolution says that an advocate is bound to accept any brief; that anyone in need of a lawyer is entitled to one, whether or not he can pay for one; that an advocate shall uphold the interests of a client...without regard to any unpleasant consequences to himself or any other; and that an advocate shall defend an accused regardless of his opinion as to the guilt of the accused, bearing in mind that his loyalty is to the law, which requires that no man should be convicted without adequate evidence. So, no doubt, Kasab has a right to defence. But what will the lawyer do? It does not seem to me possible for any lawyer or even a combination of lawyers seriously to dispute that he committed what he is accused of. The arguable question will be one of sentence—namely the choice between death and life imprisonment. If I were a judge I wouldn't sentence Kasab to death. For it is only in the hell of an Indian jail that he would realise that what the mullahs told him is false. God has no place for him in heaven and probably none exists. His nine dead companions will not, in any event, communicate with him about their sad fate. A long stay in an Indian prison will detoxify him of the superstitions and illusions instilled in him.

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Christianity and Capitalism

 

Time for some morality trades

 
By Christopher Caldwell
 
Published: December 19 2008 19:37 | Last updated: December 19 2008 19:37

 
Is our present financial crisis the result of a mistake or a crime? Is it evidence of incompetence or of corruption? Is its remedy to be sought in committee rooms or in individual consciences? When Rowan Williams, the archbishop of Canterbury, worried aloud this week that the government's stimulus package "seems a little bit like the addict returning to the drug", he revealed that we are fudging these questions.
 
The public has no settled idea about whether the global finance system seized up last summer because it was mismanaged or because it was, in a moral and metaphysical sense, wrong. The archbishop's intervention was a bold one. Much as prelates in centuries past praised Jesus's expulsion of the money-changers from the temple, we pat ourselves on the back for having driven the priests from the bourse. Morality has little purchase on economics nowadays. Maybe it ought to have more.
 
In 1926, R. H. Tawney, the great Christian socialist and economic historian, argued that we were wrong to be so complacent. His history of the Reformation, Religion and the Rise of Capitalism, described the origins of the idea that "business is business", that the economy is a separate compartment that ought to be quarantined from other spheres.
 
At a time when most encounters were face-to-face, it was possible to lead a moral economic life simply by extrapolating from the injunction to love one's neighbour, but a revolution in manufacturing, finance and trade made this extrapolation less possible. "Granted that I should love my neighbour as myself," Tawney wrote, "the questions which, under modern conditions of large-scale organisation, remain for solution are, 'Who precisely is my neighbour?' and, 'How exactly am I to make my love for him effective in practice?' To these questions the conventional religious teaching supplied no answer, for it had not even realised that they could be put."
 
Tawney, an activist in the Labour party, believed the period between Machiavelli and the English Revolution had a lot to teach his own time. Maybe it has more to teach ours, since it was marked by a "sweeping redistribution of wealth" and an "orgy of interested misgovernment", not to mention its "reassertion of the traditional doctrines with an almost tragic intensity of emotion", in the face of a world that was rendering them irrelevant.
 
Contrary to what one might expect, it was over credit, not wages, that the new capitalist classes clashed most violently with the economic morality that prevailed on the eve of the Reformation. Medieval economic morality centred on abhorrence of usury. This abhorrence is a bit embarrassing to modern Christians, who learn about it through the hounding of Shylock in The Merchant of Venice. We tend to view it as a shabby outlet for xenophobia and anti-Semitism. The main moneylenders in the period Tawney discusses were Spanish, Portuguese and Lombard Catholics, abetted by the Church and the Armada. Public outrage was not as benighted or unfocused as it looked. Large enterprises and royal courts borrowed without much difficulty, so preaching against usury did not unduly clog up the financial system – although businessmen claimed that it did. What troubled economic moralists was extortionate lending to desperately poor (we would call them "subprime") borrowers. But the term usury also covered "the man who buys [a thing] in order that he may gain by selling it again unchanged" (which we would call speculation).
 
Usury was a general term meaning "taking advantage". We dismiss those who were obsessed with it at considerable peril to our own business ethics. "If the medieval moralist was often too naïve in expecting sound practice as the result of lofty principles alone," Tawney wrote, "he was at least free from that not unfashionable form of credulity which expects it from their absence or from their opposite." In this light we can see that Fairtrade, promoters of socially responsible investing, activists for sustainable development and the micro credit movement are all groping towards a workable, tolerant, enforceable modern doctrine of usury.
 
Tawney showed that the religious revival of the 16th and 17th centuries ushered in its opposite – an individualism untethered from any social contract. As people grew firmer in their conviction that salvation could be had through God's grace, it became a much less pressing matter whether the public sphere was run on Christian principles. There was a transvaluation of values and with them, of institutions. So feudalism, "once an engine of exploitation, was now hailed as a bulwark to protect the weak against the downward thrust of competition". (Our own attitude to jobs in heavy industry has undergone a similar transformation.)
 
Tawney was not the first to make such arguments but his explanation is uniquely subtle. To simplify, Calvinism both glorified the entrepreneurial virtues and kept them under strict watch. But it turned out you could not do both. Those virtues could only be exercised if they were not universal. "How would merchants thrive if gentlemen would not be unthriftes?" One is reminded of the hedge fund mogul Andrew Lahde who, this autumn, having taken short positions on subprime real estate, wrote a crowing letter to the Ivy League hotshots at Bear Stearns, Lehman Brothers and elsewhere "stupid enough to take the other side of my trades".
 
"An organised money-market has many advantages," Tawney wrote. "But it is not a school of social ethics or of political responsibility." Competition, he added, is not a substitute for honesty. We do not at present have any non-economic ways of discussing economic and financial matters. It appears we are due to get some.
 
The writer is a senior editor at The Weekly Standard

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