Economania

It occurred to me as I watched BBC 2's 'Newsnight' the other evening that the debates, arguments and popular dissent currently expressed about the global financial and economic crisis have much of the temper of the great debates that preceded the Protestant Reformation in Europe and particularly in England between the 14th and 16th centuries. One can see direct parallels in what is now emerging as a battle of wills between international finance, politicians and the people, with international finance cast in the role of the medieval Catholic Church.

This year, 2011, is the 400th anniversary of the publication of the King James Bible - the Authorised Version, as it is known. This was not the first version of the Bible in English - there had been numerous attempts to publish a translation, beginning in the late 14th century with that from John Wycliffe to that of William Tyndale in the early 16th century; it was not even the first version approved by the monarchy - Henry VIII had approved an English Bible in 1540, known as his 'Great Bible'.

It is perhaps the Tyndale Bible that is of particular importance. William Tyndale had asked permission of Bishop Tunstall in 1523 to translate the Bible into English. Tunstall declined his request, having little regard for Tyndall's scholastic standing and being suspicious of his unorthodox beliefs. Tunstall was, furthermore, like all high churchmen, deeply uncomfortable with the idea of the Bible being available in the vernacular. At the time, the liturgy of the Church was delivered in Latin, the lingua franca of Europe's educated classes - and the only educated classes were the religious and the rich. The common herd were excluded by their lack of access to this language, a lack carefully maintained by the priesthood. It was claimed by the Church that the Word of God was not to be heard by the common herd without the intermediation of a priest, the peasantry being held unfit for something so refined, hence it was intoned in Latin and presented to the masses as an incomprehensible mystery, a sense reinforced by the use of an exclusive language. Not only was Latin incomprehensible to the common man but, as Tyndale had discovered, it was also incomprehensible to a great majority of the priests, their being so badly educated that they merely recited the Mass parrot-fashion with no idea what they were actually saying. (The origin of the term 'hocus-pocus', meaning an attempt to deceive or obfuscate with clever words, is a corruption of the words 'Hoc est Corpus' - 'Here is the Body' - intoned by the priest when offering the sacramental bread.) To present the Bible in English was to undermine the authority of the Church. Tyndale, not to be beaten, replied: "I defy the Pope, and all his laws; and if God spares my life, ere many years, I will cause the boy that driveth the plow to know more of the Scriptures than thou dost!" With that, Tyndale set off for Germany to complete his translation, which was published in the early 1530s.

It was at around this time in England that Henry VIII was having trouble with the Church, or more specifically with the Pope, who would not grant him a divorce. Henry was manoeuvring to divorce Catherine of Aragon and marry Anne Boleyn, ostensibly to produce a male heir - something which so far Catherine had signally failed to do - and thus further his dynastic ambitions. It was at this point that one William Tyndale wrote, in 1531,'The Practyse of Prelates', opposing Henry's divorce from Catherine, thus tragically damaging his future prospects with said king.

Henry's ambitions being frustrated by the Pope, Henry launched his attack on the Roman Church and in 1534 announced himself head of his newly established Church of England. To further secure his position, he then began what became known as the Dissolution of the Monasteries, a series of legislative moves between 1536 and 1541 to limit the power of the Pope in England. It is strictly incorrect to refer only to the monasteries; the dissolution included not only monasteries, but abbeys, priories and nunneries, and friaries. While many of the smaller institutions were relatively poor, the thirty biggest monasteries owned an entire third of all the land in England. The Church at this time was so powerful as to be seen as a necessary adjunct to royal power; Church and king together performed a stately dance to ensure the continued good health of both. Henry, though having inherited a well endowed Treasury from his miserly father Henry VII, had squandered much of it and was in need of further funds. Henry, notwithstanding any doctrinal disagreements with Rome, could see the good sense in getting his hands on the Pope's loot in England.

Moving now to Belgium, that same William Tyndale was arrested in 1536, condemned as a heretic for his translation of the Bible and burned at the stake. The final irony is that Henry VIII commissioned an English Bible less than four years after Tyndale's death.

History lesson over, where does this leave us?

In medieval times, the king and the Church were mutually dependent; the king protected the Church and the church validated the king, claiming him ordained to rule by God. The Church ruled the common herd by fear, firstly by the threat of eternal damnation in the fires of Hell to those who were not true believers, and secondly, just in case that didn't work, they had burning at the stake to emphasise the point.

Today, we might not have absolute monarchs and omnipotent priests, but we do have their modern offspring, governments and international finance, who, like their predecessors, are mutually dependent; governments protect finance, finance underwrites government - insofar as government bends to the will of finance.

The modern incarnation of the power that emanated from Rome has its own arcane language, just as the priests had Latin, with the same intention, that of excluding the masses. They speak of derivatives, CDOs, CMOs, ABSs, FEDs, ERDs, interest rate swaps, pay-off profiles and a whole host of other terms completely incomprehensible to the man in the street - hocus pocus for our times. Like the priests of Tyndale's time, I suspect that even the people involved in all this have no significant understanding of what it is that they are actually doing.

One might suppose, or at least hope, that even though the foot-soldiers of modern finance, the analogues of the medieval parish priests, do not have any significant grasp of what they are doing, the cardinals, as it were, those in the higher echelons of the hierarchy, would have a good grasp of the doctrine. Regrettably, this is not the case. Even the theoretical foundations of modern economics are shaky. Steve Keen, Associate Professor of Economics and Finance at the University of Western Sydney, in his book 'Debunking Economics: The Naked Emperor of the Social Sciences' (2001), attacks one of the fundamental notions of economics, that everything happens in equilibrium, an idea which by its universal acceptance means that conventional economics has produced not so much a science as a religion. To further emphasise the point, Paul Ormerod, in the preface to his book 'The Death of Economics' (1994), says, "Good economists know, from work carried out within their discipline, that the foundations of their subject are virtually non-existent."

Money is the language of the economy and in just the same way that the medieval Church sought control by its use of an exclusive language so modern finance seeks hegemony through its control of money. The Church decreed what could and could not be said: the Sun went around the Earth and woe betide anyone who said differently. Copernicus had opined otherwise but was only allowed to publish his account of the movement of the planets in 1543 when he had watered it down to say that his was just one possible explanation of the observations. Even then he did not publish until a few weeks before his death so that any charges of heresy against him could have no consequences. Giordano Bruno, born five years after Copernicus' death, later championed the Copernican view of the cosmos and expanded upon its ideas, but he overstepped the mark in the eyes of the Church, was charged with heresy and burnt at the stake in 1600. Despite the swelling tide of academic support for Copernicanism, even in 1615 one Galileo Galilei fell foul of the Inquisition for his espousal of Copernican cosmology. The Catholic Church maintained its opposition to heliocentrism until 1758 and did not issue its decree permitting the publication of books asserting heliocentrism until 1822, almost 280 years after Copernicus.

Taking Ormerod's view of modern economics, one can say that it is about as solidly founded as were the Church's view on cosmology, that is, it is based more on theology than on factual observation or reason: economics is still in the Dark Ages, the Sun and planets still move around the Earth and the apologists for current economic orthodoxy perform all manner of intellectual acrobatics and juggling tricks to explain why the actuality fails to match the theory. While economists continue to debate the equivalent of angels dancing on the heads of pins, the world careers towards disaster and people's lives are destroyed along the way.

Even if economics were solidly founded in theory, we are still left with the bigger question: what is the purpose of the application of this theory? In the 14th century Europe was devastated by the Black Death but the theologians and priests had no answers; the Church claimed to be the fount of all wisdom but was revealed as ineffectual when people appealed to it for protection against the advancing plague. Today we see the global financial edifice crumbling by the day and yet the economic theorists and apologists for finance can offer no remedies except 'more of the same medicine': the patient's life is ebbing away so the physicians recommend bleeding. In the 14th century, as people died in their millions, priests said more masses, burned more incense and recited more incantations. Still the people died in their millions.

In the face of a crumbling global financial system the economists and financiers continue, like Nero, to fiddle. They fiddle with their 'financial instruments' while the global financial edifice turns to ashes. The euro faces if not oblivion then a savage curtailment of its ambitions as a global currency. International finance has had its day as currently constituted: it is no longer relevant to the modern world and expresses a form of hegemony as outmoded as the British Empire would now be in the world of the World Wide Web. The Arab Spring, as it has come to be called, has shown the way forward; the old order has been seen to be all but irrelevant. In Greece, the government might well have made an agreement with its creditors but its government knows that it must seek the approval of the people if it is to achieve popular acceptance and all the signs are that in that cradle of democracy, the people will not be dictated to by international bankers. The Greek government would do well to remember that Greece has only been a modern democracy for barely 40 years since the end of the military junta which ruled until 1974; democracy and order are fragile flowers. In Iceland the people have taken to the streets, thrown out a government, drafted a new constitution and are pursuing criminal cases against the country's banks. (Surprising how little exposure this received in the British media.)

Economics needs its Reformation, not only a new theoretical basis, if one can be found, but more importantly, the financial economy needs to be taken out of the hands of a small and overly powerful clique - a clique which, like the Church of Luther's day, has been shown to be not only corrupt but criminally incompetent in the very matters in which it claimed to have special insight and expertise. Economics in the twenty-first century is in the grip of the very same mind-set that impeded any possibility of intellectual progress in the 16th century and now stands in need of its Nicholas Copernicus, its Giordano Bruno, its Galileo and its Johannes Kepler.

There are voices out there raised against the current economic orthodoxy but, if history is any guide, those who wield power will do their utmost to stifle anything which they regard as heresy and they will not relinquish that power without a struggle: things will get worse before they get better and the Greek people may well be the actors in what is only the first act of a very modern tragedy.

Chris Waller - Permission granted to freely distribute this article for non-commercial purposes if attributed to Chris Waller, unedited and copied in full, including this notice.

This article originally appeared in the November 2011 issue of Economania, newsletter for the Mensa International Special Interest Group on economics, trade and finance, and after, in the January 2012 issue, of Mensa Magazine.

Members can discuss this and other articles on the economics forum at International Mensa.