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THE ECONOMIC STATE WE’RE IN: CAN THE ECONOMY WORK FOR EVERYONE? Ulrich Duchrow

the

world, people’s organisations All increasingly resisting key question

and churches are ’the economic state we’re in’. They raise the of this paper: ’Can the economy work for everyone?’ I approach this question in three steps: analysis, biblical orientation and search for alternatives. over

I. Analysis: Property

Money - Power 1. The present neo-liberal capitalist economy does not work for everyone. Hearing the cries and seeing the misery of the people and the earth is the starting point for a biblically oriented perspective on the economy not the abstract models and ideologies of the ’experts’. -

The Consultation on Reformed Faith and Economic Justice in Kitwe, Zambia, organised in 1995 by the South African Alliance of Reformed Churches, heard the cry of the African people in the midst of suffering and despair. It perceived the power of the global market to subjugate and enslave people workers, peasants and consumers - to production processes and market forces. It declared, ’All the signs of the times lead us to conclude that Africans live on a crucified continent as people to be sacrificed ... The sacrifice of humanity on the altar of the global economy is intertwined with the sacrifice of nature.&dquo; What the Africans identified at this consultation has become a global reality. Moreover, what can be seen most clearly and sharply at the margins of today’s world is penetrating even rich societies. It is not necessary to repeat the symptoms over again. Everybody can see them: the exclusion of a growing number of people by unemployment, the worsening of working conditions sold as -

South African Alliance of Reformed Churches, ’Reformed Faith and Economic

Justice’, Kitwe, Zambia, 1995. 25

’flexibility of labour’, wage dumping, the feminisation of poverty, degradation of social services, destruction of the ozone layer, global warming, the extinction of species, and so on. Simultaneously, we

witness tremendous wealth accumulation in the hands of a few. But to whom should Christians and churches listen to understand what is happening and to discern requisite courses of action? Should we listen to the ’experts’ and to the politicians guided by them? They tell us that there is no alternative to the present system and state of affairs. They present us with abstract economic models and figures. According to them, the economy has its laws to be followed. Biblically speaking, however, there is no doubt that God looks at economies not from the deterministic laws of from a different perspective market forces but from the actual life of God’s children and the earth. According to Exodus 3, the first self-revelation of God starts with God’s listening to the cries and seeing the misery of the Hebrew slaves in Egypt. God says with respect to credit mechanisms which hurt people: ’If your neighbour cries out to me, I will listen, for I am compassionate’ (Exod. 22:27). Compassion is the hermeneutic key to economics from a biblical perspective. This approach, however, entails conflict for those who follow it. Compassion is an emotion. Yet mainstream experts tell us that economics is a science from which emotions should be excluded. Within the church there will be conflict, too. Most members will understand compassion as charity. Yet the Bible attacks unjust structures in the name of compassion, talks about the liberation of slaves, asks for the breaking of debt mechanisms in the name of reallife people, and so on. Biblical accounts of compassion involve changes of place, moving to the side of the downtrodden - not for charity but because there, and only there, God and God’s Messiah Jesus can be found (Matt. 25:31ff.).2 -

2. The socially regulated market economy in industrialised countries after the Second World War at least tried to make the capitalist economy work for everyone. The assumption was that national governments could regulate national economies and that the economy would respond to mass demand. Keynes’s 1944 attempt at Bretton Woods to introduce instruments for a global social regulation of the economy was rejected by the United States. This was one of the factors paving the way for neo-liberal globalisation starting in the early 1970s.

The classical liberal period of the nineteenth and the beginning of the twentieth centuries ended in catastrophes: the great recession of 1929 and two world wars. One of the key causes of the recession was the dominance of financial speculation over the economy. Cf. Dietrich Bonhoeffer, ’Das Wesen der Kirche’, lecture delivered in 1932 while Bonhoeffer was Privatdozent in Berlin; Dietrich Bonhoeffers Werke 11, 239ff.

The New Deal in the United States in the 1930s started a new

approach which was followed by the Europeans after the Second World War. Key elements were the legislation of frameworks for the markets by national governments, for example, anti-trust laws; a progressive tax system that redistributed wealth; and anti-cyclical intervention in the trade economic cycle in accordance with Keynes’s theory of employment creation by public spending. At the same time big business followed Fordist principles, increasing wages in order to create buying power for mass-produced items. In addition, the strength of the labour movement made capital owners ready to enter into what has been called an ’historic compromise’ or ’social contract’ mediated by the nation state. Between 1950 and 1978, the income of the poorest fifth of the US population grew by 144% while that of the richest fifth grew by only 99%.3 This is why this model is also called ’welfare capitalism’. When the Western powers met at Bretton Woods in 1944 to design a postwar global economy, Keynes presented a plan to internationalise this model. It contained proposals for ’neutral’ world money, an international central bank, a development fund and trade regulations that would tax countries in surplus who did not balance out their trade with deficit countries. Keynes regarded balance, justice and peace as the main criteria for a successful economy. The problem he did not foresee was that the unlimited growth upon which his model was built was not sustainable ecologically. The United States rejected his proposals on different grounds. It

wanted its strong dollar to become a world currency; it wanted a world bank and not a fund for development, and as much liberalisation of trade as possible in order to maximise profit from big corporations worldwide. Yet some regulations were introduced: the dollar was based on gold, and exchange rates were fixed between the dollar and the other currencies. Even in this compromise form, the model produced thirty years of prosperity at least for the majority in the industrialised countries. In spite of its shortcomings, it is important to realise that an alternative model to the one that we have at present was possible. The change towards neo-liberalism materialised in different -

respects. Let me mention some: First, the strengthened European

banks started to avoid national currency regulations by trading directly on the transnational dollar markets (later called ’Eurodollars’). This contributed decisively to the breakdown of the Bretton Woods fixed exchange rates in 1971, leading thereafter to more currency speculation. Behind this move from the real economy to financial speculation was the falling profit rate in the productive sphere. Competitive capitalism has to invest more and more in ever new products and tends towards overproduction. Speculation is a 3

Cf. Le Monde Diplomatique, 1995.

form of desperate attempt to avoid the breakdown of the capitalist mode of production, at least in the short term. One day the balloon of the speculative financial markets is bound to burst as well. Another factor is the introduction of monetarist policies by the US Federal Reserve Bank (the ’Fed’) in 1979, allowing the markets more freedom to determine interest rates. This led to an explosion of interest rates which was reinforced by Ronald Reagan’s arms race on credit. This, in turn, caused the crisis of unpayable debts in many developing countries, and a redistribution of wealth bottom-up everywhere because interest rates were by far exceeding real growth. Also relevant is the transnationalisation of the markets to boost falling profits, i.e. avoiding tax whilst simultaneously pressurising governments to lower taxes by threatening them with capital flight so that even rich countries end up with over-indebted budgets. The United States helped introduce dictatorships in many countries in order to open up national markets for transnational capital. The most well-known case is Chile, where the democratically elected president Allende was ousted, losing his life. 3. Neo-liberal capitalism builds on privatisation, deregulation and liberalisation. However, it uses the political and military power of the state(s) as well as the ideological power of the media and cultural institutions to secure the autonomous self-regulation of the market. As the market always produces an unequal distribution of wealth and crises, state power is also co-opted to protect this inequality and stabilise the volatility of the markets. On the whole this leads to an imperial structure of the world system and the hegemony of finance. It is not need but accumulation of money assets which directs this economy.

Consider, for example, how confidential documents of the 17th

Conference of American Armies (1987) defined ’... the domination and distribution of natural resources and of the strategic raw materials’ as the key issue of the Western world.4According to one of the documents, unequal distribution and domination has to be defended at the four levels of power: economic, political, military and what they call ’socio-psychological’ or cultural power. The strategy in the latter includes mobilisation of the media, the schools and universities and, last but not least, the churches for the ’cultural war’ to be waged against ’communism’. As the Cold War came to an end, the new ’communist’ enemy was defined: all movements for social justice and alternatives like human rights and solidarity networks, as well as liberation theology. The 1990s seemed to mark the unquestioned victory of this Western approach. But now there is a growing criticism of neo-liberalism in 4

Cf. U. Duchrow, G. Eisenbürger and J. Hippler (eds), Total War against the Poor (New York: Circus, 1990), pp. 55ff.

many quarters. However, one important element in this growing criticism seems to be neglected: private property. Historically, bourgeois capitalism was built on this fundamental concept. Following the Glorious Revolution in England, the theoretician who unfolded it was John Locke. In his ’Second Treatise of Government’ (1690) he produced all the arguments necessary to legitimate capitalism but which lead also to inequality and imperialism 5 Let us review them

briefly.

1. In §27 he says: ’Though the earth and all inferior creatures be common to all men, yet every man has a property in his own person. This nobody has any right to but himself.’ This argument may be used as a protection of the integrity of a person against the state. However, it has a second implication, as Locke continues: 2. ’The labour of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property.’ With this argument Locke justifies the

English settlers taking away the land from the indigenous people in America. But he goes a step further.

3. In §§36ff. he develops the thesis that money, which is durable, has been introduced by ’tacit agreement’ (§50) in order to allow industrious people to get ’larger possessions, and a right to them’ beyond use. As motive, he identifies the ’desire of having more than men needed’ (§37); it is not just money and its mechanisms that leads to inequality but money linked to the desire for more property. All this is already operative in the state of nature before any political organisation of civil society. 4. If, in the state of nature, someone ’harms another in his life, health, liberty or possessions’ everyone has the right and even duty to punish this aggressor (§§6ff.); the right to destroy him

like a wild beast or enslave him. If such a monster declares war against humanity by harming or killing another, then he has forfeited all human rights. 5. In changing from the state of nature into a civil society the executive power receives the task of punishment by mutual contract (§§87ff.): ’Government has no other end but the preservation of property’ (§94).

John Locke, Two Treatises of Government (ed. P. Laslett; Cambridge: CUP, 1988). On the history and legal and economic meaning of property as well as on alternatives to the neo-liberal concept of it cf. U. Duchrow and F. Hinkelammert, Leben ist mehr als Kaptial Alternativen zur globelen Diktatur des Eigentums (Oberursel: PublikForum, 2002). An English translation is in process. —

When, therefore, people like those in America or in India do

not agree with this European understanding of the law of nature and reason, they declare war on humanity and can be punished with

extermination or slavery, and their goods can be taken as reparation. In this way every war of European bourgeois society is a just war, a crusade against the enemies of humanity. This foundational theory is still operating in global neo-liberal capitalism today. The accumulation of property beyond need through money mechanisms is prior to the state, and the state has the one task of preserving and protecting this property-money mechanism. This explains the seemingly self-contradictory position of neoliberalism with regard to the state. On the one hand it says that the market has to be deregulated and liberalised. This means the state should not intervene in the accumulation of private property through money mechanisms, a process founded in natural law. On the other hand, it is the state which has to guarantee this deregulation and liberalisation as well as to protect the property. It may be objected, as Jeremy Rifkin claims in his recent book, The Age of Access, that today access has replaced property as the basic category.6Fixed capital in the productive sphere seems to lose

significance. Transnational corporations (TNCs) lease or franchise material property rather then owning it a development starting with ’just-in-time’ production. Rifkin argues that intellectual capital becomes directly productive in the cyber-economy. This may be so. -

However, it does not follow that property is not the basic category. On the contrary, it could be argued that the power of property is

widened. Rifkin does not take sufficiently into account the fact that the legal mechanism of patenting turns knowledge into ’intellectual property’. This has dramatic consequences for the Two-thirds World when, for example, it comes to seeds. Once TNCs have stolen the original seeds and patented them as ’inventions’ as in former times colonial powers stole land the indigenous people have to buy them back. A revolution in the same direction is happening with human genes. Vandana Shiva from India calls this development ’bioimperialism’ .7SO ’access’, too, is linked to property rights and aims at monetary gains. The only new consideration is that we have to add intellectual to industrial and financial capital capital has become totalitarian!8 Now capital may subject everything for selfaccumulation, even water, seeds and the elements of life itself, the -

genes. 6

Jeremy Rifkin, The Age of Access (Harmondsworth: Penguin Books, 2000). Cf. Vandana Shiva, Biopiracy: The Plunder of Nature and Knowledge (Totnes: Green Books, 1998); Maria Mies, Globalisierung von Unten: Der Kampf gegen die Herrschaft der Konzerne (Hamburg: Rotbuch Verlag, 2001). 8 A. Gorz, ’Vom totalitären Vorhaben des Kapitals: Notizen zu Jeremy Rifkins "The Age of Access"’, Widerspruch 21, no. 40 (2001). 7

Summarising, we can say that neo-liberalism is moving back to early forms of Western democracy where only property owners had political rights. According to Locke, property owners included workers because the labour force of the body is a form of property. The problem today, however, is that it is illusionary to assume that the property of labour equals the power of those who own and control capital. This is even more the case as technology increasingly replaces

labour. The result is that, in the neo-liberal phase since the 1980s, only two-fifths of the population in the industrialised countries have been able to increase their income while three-fifths have lost out. The distribution of money assets equals an exponential curve. In Germany 10% of households own half of them while the lowest 13% are indebted and 37% have a share of 4%. And this is not the true picture because it is based on voluntary and selective figures. In the United States only 0.5% of the population owns 37.4% of all stocks and bonds as well as 56.2% of all financial assets. Moreover, as capital is paying less and less in taxes, dependent labour has to pay more; in Germany nearly 80% more since 1980. Still public budgets are more and more indebted. In Germany, 25% of taxes goes to pay interest to the owners of capital the same owners who contributed heavily to the debt tax avoidance now by gain twice by receiving interest as creditors. On top of that, indebted governments are cutting social services for those who lose out twice, the unemployed and other excluded people. This situation is even aggravated in the so-called developing countries. The West is using undemocratic international institutions like the International Monetary Fund, the World Bank, the World Trade Organisation and the coalition of leading industrial powers to press for privatisation, deregulation and liberalisation of their economies and for cuts in social spending (structural adjustment programmes). Debt is not an economic problem; it is a political tool to exploit and control these countries without colonial armies. The crises in the Asian Tiger countries are used to buy up their wealth at discount prices. The same is true for Central and Eastern Europe and Russia. In Hungary, for example, 95% of the privatised banks are in Western hands, while 40% of the population is living under the poverty line. Financial mechanisms are the inner structure of the Western empire, dominated by the United States, while the military only intervenes when absolutely necessary. To conclude, I would like to quote from the report of a World Alliance of Reformed Churches consultation in Cape Town, March 2001: -

The present system, protected by the dominant imperial power and its allies, is like a cancer. It kills the lives of people and destroys nature because it subjects all life to the global market, which is aimed at capital 31

growth of the few owners of property and financial capital rather than at satisfying the needs of all people and of caring for life. The systematised greed in the market is ideologically self-justifying, rationally and scientifically truth-claiming, morally pretentious, and religiously self-sanctifying, and thus replacing God’s sovereignty over the life.

II. Biblical Orientation

4. The first form of an economy based on property-money mechanisms was introduced in Greece in the eighth and the seventh centuries BC, then spread to the ancient Near East, including Israel.

Up to the eighth century Bc, the ancient Near East and also the eastern Mediterranean area was characterised by aristocratic and monarchic systems of rule. Here it was the form of direct violence by which the powerful appropriated large estates, slave labour, raw materials and goods as well as tribute from the conquered peoples. During the eighth and seventh centuries, a new type of economy spread from Greece: the property economy.9 For whatever historic reasons, the aristocratic order was replaced and superseded by a legal revolution protecting private property by absolute legal provisions. Free property holders formed the new community of the ’polis’; property was an instrument of freedom against the feudal class.

On the basis of this property value, a new credit economy

developed with strict rules on demanding securities and interest for in most cases loans. If the loan could not be paid back, the pledge the land of the debtor fell into the hands of the creditor. An early form of interest payment was debt slavery, which meant that the -

debtor had to work for the creditor in order to pay the interest. More and more this credit economy developed into a money economy. If the debtor did not have money to pay interest and return the capital, then land and labour were given as a pledge (cf. Neh. 5:1-5). Taking into account that, in addition to providing for their own subsistence, the families of farmers had to produce a surplus value for the luxury of the aristocratic/monarchic elites and also tribute for the respective superpower, it is easy to understand the socially and economically disastrous consequences of this new economy. Small farmers could be forced into starvation, deprived of their means of production and driven into slavery by the new mechanisms of private property, credit and interest. This is what the prophets protested against in Israel (Isa. 5:8) and against which Israel developed laws to prohibit debt mechanisms, such as prohibiting the taking of ’security and interest’ and for the periodic liberation of debt slaves. 9

Cf. Heinsohn, Privateigentum, Patriarchat, Geldwirtschaft; and Gunnar Heinsohn and Otto Steiger, Eigentum, Zins und Geld: ungeloste Rätsel der Wirtschaftswissenschaft

(Reinbek bei Hamburg: Rowohlt, 1996).

5. The response of the prophets and law was clear: there is no absolute human property.10 God is the owner of people and land. The life of everyone and the earth is to be understood theologically and not only by economic criteria. Theological criteria are to be implemented in preventive regulations and laws limiting wealth creation for the few whilst caring for the needs of

everyone.

What, then, was the mission of the people of God in the new socio-

economic context? Besides the periodic liberation of slaves ( Jer. 34:8ff.) the cancellation of debt was included in the rules of the seventh year. The first example is Deuteronomy 15:lff. (the oldest texts of Deuteronomy stemming from the Josianic reform of 622 Bc). But what does this text mean? The Hebrew concept behind the practice is shmittah, renunciation.11 The creditor is supposed to renounce not only his claim but also the pledged property of the debtor, normally his land including his house which are the means of production of a small farmer. This means that, after seven years, not only the possible consequence of the debt (the debt slavery of the family) is cancelled but the cause is also eliminated namely, the indebtedness and the consequent mortgage on the means of production of the debtor. This opens up a new beginning.&dquo; In Deuteronomy 15:12ff., the liberated slave even receives a small capital sum from his master so that he can make a new start as a free small farmer. This is without parallel in the ancient Near East and GrecoRoman antiquity; in these regulations, Israel rejects the absoluteness of property as well as the transformation of an enslaved person (at least of its own people) into absolute property. If the people of God follow God’s good rule of justice and compassion, there will be no poor among them (Deut. 15:4ff.). Here is an economy aimed at satisfying the needs of everyone. Against this background, it is possible to understand Leviticus 25 in context. This frequently cited text summarises the socio-economic rules, as codified by the Priestly Codex in the so-called holiness law, for the post-exilic new beginning in Judea. 13 The heart of the text is the theological statement that explains why Israel must have an economic order that is fundamentally different from that of the surrounding peoples, whose laws are given by kings or property from Mount Sinai owners. In Israel, law comes from elsewhere and is given by God. Its origin is not the power of (Lev. 25:1) kings or property owners and, characteristically, it gives priority to the interests of equality amongst human beings and especially to the -

Cf. Duchrow and Hinkelammert, Leben ist mehr als Kapital, pp. 22f. Cf. T. Veerkamp, Autonomie und Egalität: Ökonomie, Politik und Ideologie in der (Berlin: Vektor Verlag, 1993), pp. 65ff. Schrift 12 Cf. for example Nehemiah 5 and 10:32. 13 Cf. Frank Crüsemann, Die Tora: Theologie und Sozialgeschichte des at. Gesetzes (Munich: Chr. Kaiser Verlag, 1992), pp. 86ff.

interests of the poor and weak. According to Leviticus 25:23, God says: ’No land shall be sold outright, because the land is mine, and you are coming into it as aliens and settlers.’ Unlike in neighbouring countries, the people of Israel can be tenants of the land but not owners.

My point, therefore, is that anyone who refers to the Jubilee year today must be ready to face the question of property. The laws of Leviticus 25 are based on a rejection of the absoluteness of property an idea originating in Greece and later codified in Roman law. If

you want to follow the biblical God, you must accept God as the owner of the land and every ’means of production’. You must accept that the implications of this in an agrarian society were that human beings could have only the right to use and to rent land, and not to own it. From here, I suggest, everything else follows: In the seventh year the land has to be allowed to Leviticus 25:2-7 celebrate a ’Shabbath’. -

Leviticus 25:8-13 After seven times seven years, the ’Jobel’, the horn, has to be played and all families have to get a piece of land in order to be equally able to care for themselves as in the tribal community before monarchic times. -

Leviticus 25:14-17 The price of the land must not be determined by the market and therefore by speculation. Rather, the fiftieth year is the reference point against which to calculate how many harvests a land can still produce, and how many have to be paid. -

If a brother and his family are so in need that Leviticus 25:25-28 they have to sell their land and their house, then the next relative has to redeem them (the order of Ge’ulah). -

Leviticus 25:35-38 When people of Israel have to make loans, they shall not charge interest or additional tribute from other families. -

Leviticus 25:39-46 Nobody shall enslave persons of his own people, the Israelites, because God is their owner. God has liberated them from slavery in Egypt. -

It should be mentioned at this point that the Priestly Codex weakens some of the social laws of Deuteronomy. Liberation from slavery and the restitution of the land lost through seizure are taken out of the regulations of the seventh year and postponed to the fiftieth year. What is the explanation for the fact that historically this is the only text where the restitution of the distribution of land is mentioned for the fiftieth year? It seems that this is related to the return of the exiled people from Babylon fifty years after their deportation. At this time this problem was very relevant: How was the distribution of the land to be regulated after the landless poor, who were left in the country, had taken and cultivated the fields of the exiled upper class? Are the big landlords to get back their land which they once took from the people through violence and debt mechanisms, or should 34

they not get back anything? The answer given by the Jubilee regulation is a compromise on the basis of the pre-monarchic egalitarian tribal society: ’Every family shall have a piece of land for their subsistence.’ Later, Third Isaiah comes back to the Jubilee as a hope of the future (Isa. 61:2: ’A year of the Lord’s favour’). This is taken up by the evangelist Luke in chapter 4:lff., when he proclaims that this hope is being realised in and through the Messiah, Jesus. In Acts 4:32-35, Luke depicts the early Christian community in a way that fulfils the Deuteronomic Torah in the form of a community sharing all property, with the effect that in this community there are no needy poor (cf. Deut. 15:4). Life for all through justice on the basis of God’s abundant gifts is the hermeneutic key for the biblical view of the economy. 6. Imperial totalitarianism has to be resisted. Such resistance anticipates the kingdom of God, which already empowers people to build alternatives.

The post-exilic Judaic community and also Jesus and his followers lived God’s alternative economic and social order proactively. Significantly, however, they also resisted when the Hellenistic/ Roman empires and their collaborators in the provinces tried violently to impose political and economic rules and practices which were against God’s law, i.e. against the lives of people. The story about the resistance of the three men refusing to adore the golden statue is a very good example (Daniel 3).14 Similarly, Jesus not only demands a in what we clear decision for either God or Mammon but attacks the collaboration of the call today ’direct non-violent action’ economic centre in Judaea, the Temple with Rome and calls for a boycott of the currency of the Roman occupation forces (Mark 11:15ff. and 12:13ff.).14 Even in this short and selective overview of the biblical alternative approaches to mechanisms of indebtedness and impoverishment, God’s justice it becomes clear that the key theological elements are rooted within very specific socio-economic and compassion contexts. Therefore we need careful hermeneutic reflections in order to release the power of the biblical texts for the solution of our present -

problems. 16 14

Cf. Veerkamp, Autonomie und Egalitdt, pp. 243ff. This is argued by Ched Myers, Binding the Strong Man: A Political Reading of Mark’s Story of Jesus (Maryknoll, NY: Orbis,1994), pp. 297ff. and 310ff. 16 The European Kairos Document of 1998 has tried to unfold a comprehensive European agenda in view of the issues taken up in the subsequent paragraphs. The full title of the document is ’European Kairos Document for a Socially Just, Lifesustaining and Democratic Europe: A call to faith communities, trade unions and all movements and individuals that are working for social, political and economic change, to build coalitions to work for the liberation of society from the stranglehold of the deregulated globalised economy and its competitive culture’, Salisbury, May 1998. 15

III. Resistance, Alternatives and Re-regulations Today When approaching our own situation in the light of biblical history, some preliminary hermeneutical reflections are necessary. There is one basic analogy between the context of Judaea after the eighth century Bc and European modern times since the fourteenth century AD: the political economy of Europe echoes the absoluteness of private property, and subsequent interest and money mechanisms, of GrecoRoman times. This was prepared for philosophically by Hobbes and, as we have seen, by Locke, on the basis of Roman law, codified in the Western constitutions such as the American and the French Constitutions of 1776 and 1789, as well as in the Code Napoleon, from where it was taken over in most European constitutions and codes of civil law. The common law tradition reflects the crucial role of property in its own way. Besides this analogy there are two important differences between ancient and modern times that we must take into account in order to avoid inappropriate exegetical leaps when relating biblical texts to our own situation. The first difference is the replacement of slave labour by wage labour. This occurred in a long process which lasted until the nineteenth century. However, as has been shown, labour in the present era is losing more and more power to globalised capital. Second, the capitalist mode of production was developed with the help of wage labour. This process took not only over the money functions of circulation and treasury building but also developed an enlarged accumulation function. In the Hellenistic/Roman system, the owners of the means of production, land and slave labour, tended to put the money that they earned back into circulation. In modern times, the profits gained from private ownership of the means of production are reinvested in order to maximise profit through ever lower costs of production, or lend money at interest and so gain an even larger profit. This is exactly the meaning of capital as distinct from money: investing profit for more profit. The consequence is that, unlike in antiquity, modern times have seen the emergence of a

growth economy.

This means that it is not possible simply to take over the prohibition of usury from the Bible as an instrument with which to counter contemporary mechanisms that lead to impoverishment and debt. Within the framework of the capitalist growth economy, in which the owners of the means of production can appropriate the surplus value created by labour, interest is the profit part of the surplus value created through growth. 17 The closest analogy in a capitalist economy to the biblical prohibition on usury would be an orientation of interest rates to real economic success and growth. Since the 1980s, however, 17

Cf. Veerkamp, Autonomie und Egalität, pp. 28ff.

- 36

the average real interest rate has been much higher than the average growth rate of the real economy, which means a continuous transfer of wealth from labour and poor countries to capital. 18 With these hermeneutical reflections in mind we are ready to look at economic alternatives today. 7. In order to redirect the economy towards satisfying the needs of everyone now and of future generations we do not have a blueprint of the kind real socialism (state capitalism) thought was necessary. We have to apply a

multiple strategy.

Real socialism thought that social problems could be solved by holding all the means of production as state property and creating a centrally planned economy. We cannot discuss the details of this historical experience. For our purposes two observations must suffice. First, this approach did not challenge the basic assumption of the Roman and modern understanding that property is absolute. Roman law calls it dominium, which is the right to use arbitrarily, misuse and even abuse the owned thing. This is documented by the ecological damage caused by socialist economies, which is similar to or worse than that caused by the West. Second, not all citizens could participate in economic decision making, but only the political elite who

had access to more wealth than the rest. What we need, therefore, is not a strategy derived from state socialism but a different understanding of property and respective strategies.19 An ancient distinction that might still be useful is that between ’property for use’ and ’property for increasing wealth’. This distinction has been made since Aristotle. ’Property for use’ serves the lives of people and has to be preserved for future generations. Even the Romans were familiar with this distinction, calling it patrimonium over against dominium. It may take private or public form and should be guaranteed by law everywhere. Privately, it would relate to every property helping to satisfy basic needs like food, shelter, and so on. If people claimed luxuries as basic needs, then limits were formulated according to democratic decisions. Public goods were excluded from

becoming private property. Arguably, therefore, the false alternative of the Cold War ’private versus state property’ has to be overcome. What people and earth need is a mixture of personal, co-operative, communal, national and private property responding to social, ecological and democratic criteria in a bottom-up economy. 18

Cf. E. Altvater, ’Die neue Finanzarchitektur’, Widerspruch 21, no. 40 (2001), pp. 13ff. 19 Cf. H. Chr. Binswanger, ’Dominium und Patrimonium: Eigentumsrechte und Pflichten unter dem Aspekt der Nachhaltigkeit’, in M. Held and H. G. Nutzinger (eds), Eigentumsrechte erpflichten (Frankfurt/New York: Campus,1998); Duchrow and Hinkelammert, Leben ist mehr als Kapital, chaps 7 and 8.

This said, the question of property for wealth creation also needs

to be addressed urgently. One of the results of the democratic and labour movements of the nineteenth and twentieth centuries was the

notion that all private property has social responsibilities so that it also serves the common good. In some countries such as Germany, for example, this is written into the constitution (GG art. 14(2)). On this basis we had a progressive tax system that redistributed the wealth that was created unequally by the market. We also had communal and national forms of property related to basic goods and services. However, the globalisation of capital has eroded these

constitutional rights. Here we may face an objection. In his recent book The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, Hernando de Soto argues that the only reason the majority of the people lose out in the ’third world’, and in the former communist countries, is the lack of a unified legal property system. 21 If informal economic potential were legalised, wealth creation for everyone would happen, as the history of the United States shows. His argument may have been true for previous historical periods, for example in Greece. However, if property ownership is not made socially, ecologically and democratically accountable and responsible in the face of ecological destruction, then exclusion and a widening gap between rich and poor will predominate. So we ask: What strategies are available to win back social, ecological and democratic control of the property-based economy? The present situations of power, and also of consciousness, probably do not allow for a complete replacement of the capitalist economy although it may well collapse because of internal economic, social and ecological contradictions. Therefore, I continue to argue for a double strategy: ~

Let us move as much as possible towards non-capitalist models and modes of production, distribution and consumption at local and regional levels. Let us, at the same time, fight as much as possible for social, ecological and democratic control of capital in the macroeconomy - in other words, for a new kind of social contract.

The different elements of this double strategy call for closer

investigation.

8. First, we have to resist neo-liberal capitalism in both its allegedly valueoriented and its cynical forms. We also have to resist all forms of prosperity theology which legitimate it. In this situation the old answers of theological realism do not suffice.

Hernando de Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (New York: Basic Books, 2000), passim. 20

The first and foremost task is to break the cultural myth that there is no alternative to neo-liberal capitalism. David Jenkins’s book Market Whys and Human Wherefores analysed critically neoliberal arguments and promises, showing in devastating fashion that practically all of them are lies.&dquo; A profit-oriented global competitive capitalist economy, in which capital’s blackmailing strategies squeeze subsidies out of workers and governments, can never work for everyone. Franz Hinkelammert distinguishes between two types of neo-liberal argument.22 The first goes back to Adam Smith, who argued for the market on moral grounds. In this case, argues Hinkelammert, counter-arguments can be built on the inner contradictions of neo-liberal positions. The second type is what he calls ’cynical capitalism’, represented by economists like Friedrich Hayek, Norbert Bolz and David Bosshart. According to Hinkelammert, they argue tautologically on the basis of the ’will for power’ as formulated by Nietzsche or on the (misunderstood) notion of the ’survival of the fittest’ (social Darwinism). This means that there is no way to counter them by referring to reason or ethical standards; the only way to argue against them is by revealing the lethal and even suicidal consequences of their theory for concrete life. ’Prosperity theology’ is the theological expression and justification of neo-liberalism and has to be rejected as heresy. Its classical form is the neo-Calvinist understanding of success and wealth as the signs of being elected by God. Today there are lots of evangelical and charismatic movements and sects, particularly in the United States and operating from there worldwide, which promise their members health, wealth and success and church growth. However, some of these influences have also entered mainstream churches, for example, the hiring of public relations firms in order to attract members. In the face of these challenges from neo-liberal economics and theological capitalism, the old answers of theological realism do not suffice. They assume a common framework of reason and moral criteria as well as legal frameworks for a socially regulated market economy. Where these are missing the rejection of market totalitarianism and seeking alternatives are the ’real realism’. -

9. The alternative vision links social, ecological and intergenerational criteria to the economy. A basic revolution has to happen in the minds of us all. We still take for granted that economic success can be measured in monetary terms 21

David Jenkins, Market Whys and Human Wherefores (London: Geoffrey Chapman, 1999); Susan George and Fabrizio Sabelli, Faith and Credit: The World Bank’s Secular Empire (London: Penguin Books, 1994). 22 Franz Hinkelammert, Der Schrei des Subjekts (Lucerne: Exodus, 2001), pp. 321ff.

-39

that indicate growth. This is what the gross national product (GNP) tells us. Yet, as has often been stated, simplistic measures of this kind include very negative things as if they were positive, and vice versa. For example, an accident on the highway or the poisoning of a river might count positively in the GNP because both entail new goods and services. Conversely, we discount housework because it is not paid for. For a long time the United Nations Development Programme (UNDP) has tried to introduce new indicators into the so-called human development index. Even more radical is the proposal of Hans Diefenbacher, who has developed a set of indicators which interlink economic, social, ecological and democratic success.23 The point of this approach is to overcome the isolation of economic factors from life in all its dimensions and to avoid reductionist forms of economic measurement.

But how are we to implement a new, life-enhancing mode of economy in a double strategy? 10. It is at the local/regional level first of all where people need to regain the power over their economy that has been progressively lost to global capitalism. Indeed, small-scale alternatives for transcending capitalism altogether are available. Many initiatives in India, Bangladesh, the UK, Germany, France and Canada show that this is possible.24 In Canada a campaign of the cities and communities has been started to oppose the General Agreement on Trade in Services (cf. the Resolution of Vancouver). 25 In models of this kind we have the basis for a life-enhancing, people-centred and people-driven economy. Locally people have lost more and more power over their economy. This trend is now fostered by the WTO negotiations on a General Agreement on Trade in Services, including the privatisation of local public services such as traffic, health and education. In his book Captive State, George Monbiot has shown for the UK how this policy has decreased the quality of services, made them more expensive and subsidised private companies from tax money. 26 All this suggests that it is crucial for local communities to win back control over those aspects of the economy which are necessary to satisfy the basic needs of the people. As mentioned above, this includes the question of ownership. We need careful reconsideration 23

H. Diefenbacher, Nachhaltige Wirtschaftsentwicklung im regionalen Bereich 1996). (Heidelberg, 24 Cf. Mies, Globalisierung von Unten, pp.158ff. and 185ff.; Diefenbacher, Nachhaltige Wirtschaftsentwicklung; and D. C. Korten, When Corporations Rule the World (San

Francisco: West Hartford, 1995). Cf. P. Julien, ’Council of Canadians’, Le Monde, 2 October 2000. 26 George Monbiot, Captive State: The Corporate Takeover of Britain (London: 25

Macmillan, 2000).

of where communal and co-operative ownership is the most adequate form of property. An economy needs to be built bottom up, not top down. This point is made in the classic book Short Circuit by Richard Douthwaite. 27 He describes four areas in which people can organise co-operatively in order to develop self-reliance: creating their own money for exchange; doing their own banking, thus keeping their saving power in the region; using locally available energy like sun, water, wind and bio-mass; producing and marketing basic food locally. All these fields of action aim at satisfying needs rather than

accumulating private assets.

Local initiatives, however, are not enough. Globalisation, left alone, destroys more than can be built up locally. Therefore, ’Protect the Local, Globally!’28 11. Given the present power situation, we cannot hope for a non-capitalist macro-economy in the near future. There are realistic goals and instruments for re-regulation of the economy socially, ecologically and democratically at

global, European, national and local/regional levels. However, we must recognise that the neo-liberal agenda is driven not only by global capital forces and multilateral institutions but also by capital-dominated media systems which push it into hearts and minds. This means that there is no way at present to radically transform systems of money-dominated power. However, since the successful intervention in Seattle in December 1999, at the occasion of the WTO conference, global, civil society

alliances have shown remarkable countervailing power. Movements and non-governmental organisations from all strands and continents have built coalitions for an alternative economy: peasants, workers, women, indigenous people, consumers, and so on. Because capitalist globalisation has become total, affecting all spheres of life, people of all kinds are waking up. This is an important shift compared with industrial capitalism where it was mainly the labour movements that organised countervailing power. Due to the protests in Seattle, the WTO could not achieve its plan for a new round on trade liberalisation. In Washington and Prague the IMF and World Bank policies were exposed. This increased the pressures on these institutions which, so far, have only responded to criticism by changing their rhetoric. The actions against the G7 meeting in Genoa in June 2001 were widely publicised because of the death of one of the demonstrators and the ruthless violence of police actions. But for what do these counter-summits ask? All of them ask to stop privatisation, deregulation and liberalisation in neo-liberal form (consider the Seattle slogans: ’WTO puts profit over people and 27

R. Douthwaite, Short Circuit: Strengthening Local Economies for Security in an Unstable World (Dublin: Lilliput Press, 1996). 28 See Colin Hines, Localization: A Global Manifesto (London: Earthscan, 2000).

the planet’; ’The World is not for sale’). Beyond this, however, there is a wide spectrum of demands and strategies. Let me mention some of the goals and instruments which find broad support. One of the most significant instruments is the so-called Tobin Tax, a tax on speculative capital transactions. It is not a panacea but can cool financial speculation, even though the tax is only supposed to be 0.5% or less. Further, the income generated by this tax could fuel a social or structural fund to be used for the development of poor regions. This fund was proposed a long time ago, not only by Keynes but also by the UNDP in 1994 in the context of the Copenhagen Social Summit. If widely accepted, it is crucial that it should be administered neither by the IMF nor by the World Bank but by a more democratic institution such as the UN in co-operation with civil organisations. Countries such as Finland and Canada have already agreed to the Tobin Tax. In France and other countries, organisations such as ATTAC are campaigning for it.19 Kairos Europa and Pax Christi have joined ATTAC in forming a network for democratic control of financial markets in Germany, and have started to invite the churches in Western Europe to engage in this campaign. These organisations are also concerned to request controls on capital flows in order to guard against the quick moves of ’hot money’ of the kind that caused the Asian financial crisis. China avoided being drawn into it because it still had capital controls, which other countries had abolished, often under pressure from the IMF. Another very important point is the fight against ’tax flight’ by closing down tax havens (off-shore centres). There are about fifty such havens worldwide, but a special problem is that key financial centres like London, New York, Tokyo and Bangkok also have their ’special jurisdictions’. In countries such as Germany and Switzerland, whose constitutions include the obligation of the social responsibility of property, tax flight should be regarded not only as criminal but anti-constitutional. Cases should be brought in the constitutional courts against perpetrators including governments which fail to make capital pay taxes. In Europe the contribution of tax on capital has dropped from 50% to 35% in the last twenty years. 31 As far as property is concerned, we need worldwide legal changes in order to win back a mixed system of property, particularly to keep common goods like water, seeds and genes out of privatisation. Another key demand is the democratic reform of the global economic institutions along the lines suggested by Keynes at Bretton Woods and drawn up by the UNDP in its 1994 Human Development -

Report.31 29 30

http://www.attac.org/index.htm. Date downloaded: 27 March 2002.

Altvater, ’Die neue Finanzarchitektur’, p. 21. Cf. U. Duchrow, Alternatives to Global Capitalism — Drawn from Biblical History, Designed for Political Action (Utrecht: International Books, 1998), pp. 288ff. 31

All these and other necessary changes will not reverse the trend of splitting societies into rich and poor and of producing financial crises if they do not finally lead to pushing the interest rate under the rate of real growth.32 Breaking themselves with high interest rates by working with alternative banks could be one of the most important contributions of the churches in the struggle for economic justice. 12. The churches will have a unique mission provided they continue to post-Constantinian assimilation to the powers that be. The call of the World Alliance of Reformed Churches (WARC) in 1997 for a ’committed process of recognition, education and confession (processus confessionis) against economic injustice and ecological destruction’ endorsed by the Assembly of the World Council of Churches (WCC) in 1998 as well as the Ecumenical Decade to Overcome Violence (including structural and cultural violence) have led to a dynamic intercontinental process.33 Together with other global non-governmental movements, the churches may be enabled to participate in re-directing the economy to work for everyone, thus becoming credible witnesses to the God of life. overcome their

At the start of this paper I quoted from the Kitwe Consultation on Reformed Faith and Economic Justice organised by the South African Alliance of Reformed Churches in 1995. The Kitwe consultation discerned that ’today the global economy has been sacralised, and elevated to an imperial throne. It has changed places with the human beings who created it. By redefining what it means to be human, it has become the creator of human beings. Thereby it usurps the sovereignty of God, claiming a freedom that belongs to God. For us as Christians this raises the question of idolatry and of loyalty to God or mammon.’34 The consultation also proclaimed, ’It is our painful

conclusion that the African reality of poverty caused by an unjust economic world order has gone beyond an ethical problem and become a theological one. It now constitutes a status confessionis. The gospel to the poor is at stake in the very mechanism of the global economy today.’ The African consultation put global economic injustice and ecological destruction at the same level as national socialism in Germany and apartheid in South Africa. It urged the WARC General Council to consider calling a confessing movement of the churches of the South and others that are in solidarity with them. The Debrecen General Council in 1997 responded and called member churches to a processus confessionis on economic injustice and 32

Altvater, ’Die neue Finanzarchitektur’, p. 24. Cf. U. Duchrow and L. Diez (eds), ’Dient Gott, nicht dem Mammon’, available from World Alliance of Reformed Churches, 150 rte de Ferney, CH-1211 Geneva. 34 Cf. Reformed World 47, nos 3 and 4 (Sept. and Dec. 1997), report on the 23rd General Council, pp. 184ff. 33

the destruction of life on earth; a process of recognition, confession and action in the context of globalisation.35 There has been significant progress on this journey. In response to the financial crises of Asian countries, symposia on the consequences of economic globalisation were held in Bangkok and in Seoul in November 1999. The Bangkok symposium sent messages to churches, faith communities, the WTO, the IMF and so on, urging action against economic injustice and destruction of the earth. The next symposium took place in June 2001 in Budapest, focusing on the consequences of economic globalisation in Central and Eastern Europe. Its message was: ’You can’t serve God and Mammon.’ The Harare Assembly of the World Council of Churches embraced this processsus confessionis. There has also been close co-operation between WARC and the WCC on this journey, especially the Bangkok conference in 1999, which also involved the Christian Conference of Asia, the Church of Christ in Thailand, the Asian Cultural Forum on Development and the Buddhist community. Other world communions, such as the Lutheran World Federation, have joined this process. The member churches in various regions are also beginning to respond to the Debrecen call in a significant way. In Western Europe there is close co-operation with Kairos Europa. In June 2000 the WCC and WARC co-sponsored the colloquium, ’Faith Communities and Social Movements Facing Globalisation’.36 Now we are preparing together a process of engaging churches for democratic control of financial markets. Educational and liturgical materials are being published and workshops for training leaders in the churches organised.37 The climax of this part of the process was a church assembly in the Netherlands in June and a hearing in the European Parliament later in 2002. Forthcoming important global decisions will be made at the general assemblies of WARC (2004) and the WCC

(2006).

As it continues, the global economy is giving rise to an increasingly grave situation, causing the unprecedented suffering of people, their socio-economic exclusion, and the cataclysmic destruction of life on earth. All this requires churches and faith communities with a great urgency to intensify their confession, resistance, implementation of alternatives and political struggle for regaining control of transnational capital and creating an economy that works for everyone.

In Reformed World (Geneva, 2001); on internet http://www.econ-theo.org (Date downloaded: June 2001). 36 Proceedings of the colloquium are available from the World Alliance of Reformed Churches, Geneva. 37 An English-speaking workshop was held from 31 January to 3 February 2002 in the monastery of Frenswegen near the Dutch-German border.