The New Economics: A Manifesto, by Steve Keen | a theological response by Paul Tyson

Keen’s latest typically insightful book is – as they all are – about the follies and possible cures of contemporary academic economics and its horrifying political application. Interestingly, Keen uses theological metaphors to describe both the problem (“religion”) and the solution (“reformation”). As I am a theologian with a keen interest in economics and Keen’s writings, I will take the liberty of making a theological response to his use of these metaphors. In so responding I am, no doubt, taking Keen’s occasionally religious turns of phrase much less metaphorically than Keen is, so this response should not be mistaken for a review. Yet I think theological categories (alas, in their abuse) are better equipped to define the role economics as an academic discipline now plays than most other categories. I think the leap from Keen’s critique of neoliberalism [1] to theology may prove more fruitful than the good (probably agnostic) professor himself might have imagined. But we will ease into the hot theological bath gently.

The first chapter in Keen’s book opens by pointing out that about 90% of professional economists adhere to the neoclassical ideology. This large majority entirely failed to foresee the Global Financial Crisis of 2007. Unsurprisingly, all economists who did see how untenable economic reality had become, and predicted the GFC, were from the 10% of professional economists who are not neoliberals.

Keen argues that the reason neoliberals failed to see the coming of the GFC is because they used theoretical models that are un-interested in a few small issues; debt, money, finance, jobs, reality, and the like. In other words, the clarity and brilliance of neoliberal economic models is achieved by having nothing much to do with the real world (is this sounding like theology yet?).

Keen beautifully grasps that the realities of human life concern how dynamic sets of inherently complex relationships, multiple and often incoherent frames of human meaning, and human knowledge and power constructs, interact with each other and the actual world. Even so, down-the-gurgler trajectories can often be seen, and were seen before 2007 by non-neoliberal economists. They were also seen by non-economist observers alert to the obvious criminal symptoms of griftopia in the casino of futures as played by the sub-prime mortgage mafia. It was dysfunctional neoliberal models, oblivious to reality, that produced it signature forward looking blindness in 2007. Professor Keen maintains that there is nothing to be gained from treating markets as if human behaviour is composed of a set of inert and mappable rational necessities defined by determinate mechanical equilibriums. That simply isn’t the real world.

Markets are made and run by humans. Radical indeterminacy entailed by – among other factors – human freedom and the active agencies of valuing, complexly decisional and purposive beings, are integral with how markets actually work. Emotions – such as fear and greed – are integral with how markets work. Higher frames of meaning – categories of justice, freedom, love and dignity, as well as the dark domains of malice, lust and evil – cannot be removed from the world of human economic action either. States, banks, laws, power and nature are integral with how markets work. And – as with any human power and meaning habitus – faith, worship and belonging to a community of doctrinal orthodoxy and symbolic practice, are integral with markets. But Neoliberalism is largely uninterested in any of these matters: it expertly ignores possibly all the most significant features of how human markets and systems of financial power actually work. And it uses impossibly idealized and just plain wrong mathematical modelling to boot.

Keen deftly points out that neoliberal economics is remarkably indifferent to its obvious theoretical and practical failings. Despite being consistently and demonstrably wrong, it is an astonishingly resilient ideology that manages to ride merrily forward over every catastrophic exposé of its inadequacy. This, Keen insightfully posits, is because neoliberalism is in fact a religion (in the worst meaning of the term) and not a science. And a highly influential religion at that.

Let me riff on neoliberal economics as a system of religious doctrines and practices. (At this point my response to Keen’s book definitely departs from being a review. On the subject of review, I can do nothing by recommend Professor Keen’s magnificent autopsy of the long dead zombie of neoclassical theory, and applaud his carefully argued pathway towards a viable alternative theoretical outlook. Though, I doubt anyone will take a theologians word on economics, so best read the book for yourself, particularly if you are a hard-headed number crunching type, like Steve Keen.)

As a theologian, it is strikingly obvious that politicians and corporate leaders simply love to participate in the shamanic gibberish of neoliberal ecstasy, and eagerly hang on the (invariably wrong) prophetic utterances of our neoliberal scientistic priest-caste. But this is a secular religion using the sacraments of data (and the iconography of graphs), the mystical language of mathematics (which Keen calls “mythematics”, not to be confused with actual mathematics), and (divine) equilibrium theorems as doctrines. Due to these secularist disguises you may find the religious signatures of neoliberalism easy to miss. But ride with the analogy, even though this priest-craft is explicitly promoted as science.

Significantly, the caste of economic priests act as if they are ‘scientists’ of ‘economic reality.’ The ‘real world’, they explain to us, simply requires the de-regulation of high finance, healthy tax-havens, and huge tax breaks, subsidies, and bail-outs to the super rich. Sometimes these priests may weep a few crocodile tears over how helpless economic science is to do anything other than watch ‘failed states’ and the unemployed become destitute and displaced. Yet fear not; Market knows best – and what is good for Market is good for us all. Trust in the Market with all thine heart and lean not unto thine own understanding. And remember, the doctrinally orthodox worship of the Market is the beginning of wisdom.

Neoliberalism may be impossibly dysfunctional as a serious science of human behaviour, but as a religion neoliberalism actually has a very profound impact on the real world. And – let us face it – the mantras of neoliberalism are what our prevailing power elites want to hear.

Moving into some of the specific insights of Keens book, chapter two is titled “money matters.” This is because to the central doctrines of neoclassical economics, money does not matter as it is thought to be simply a means of exchange. The prevailing neoliberal doctrines maintain that restricting the supply of money, and (when that inevitably fails) getting the central bank to fiddle with interest rates is all a government can do to promote the self-regulating eternal equilibrium of optimal wealth generation (which exists only in models). But this is a great religious fraud. The reality is governments create money, and thereby created the economy, by issuing currencies. Money is crucially important for an economy, and the creation of money is not just a convenient way of doing barter; it is essential to the existence of economies.

And here is an interesting point. If the State creates money, largely to assert its own power via facilitating the means of wealth generation and taxation, and markets and economies flourish as a derivative of State power, then economist are the obvious priest-cast when Money itself becomes the central object of State (and hence Private) power and worship. As we are all worshippers of Mammon now, economists are our life-world’s natural priests. And these priests do have an intimate appreciation of what doctrines we need to believe in order to keep the distinctive system of worship and power that we live within going.

The class of financial elites that has benefitted most from the post-war super-power global currency of the US is now intimately enmeshed with the State. State power, Private wealth, and Banks are mutually supporting principles. There is nothing new about that. But as US ‘State’ power is a global imperium, it is not much concerned with the actual wellbeing of the citizens of the United States. So it is global wealth accumulators who are integrated with the global imperium of ‘State’ power and its conditions of wealth creation. These wealth accumulators now use the organs and arms of the State (and any state will do) to advance their own global interests over the top of citizens to whom the modern liberal democratic state is meant to be accountable. Neoliberal religion justifies, blesses and sanctifies the necessity of eroding the citizen’s control of the State. This priest role is a crucial feature of how The State, The Corporation, and The Bank align themselves against citizens and commandeer the wealth of the global economy for the super-rich global 1%.

Ironically, our dominant super-power upholds its global hegemony with the force of arms, as maintained by the enormous tax base of US citizens. The Crown, the Temple, the Treasury, the Generals, and the Rich are in close harmony with each other: all the major powers we live under now support the interests of wealthy transnational elites over citizens. They do this – in allegiance with the finance sector – through the creation of money, and this truth must be firmly with-held from the hum drum believers of economic orthodoxy. Hence, money does not matter in neoliberal doctrine. What one must not see is as religiously important, in this context, as what one does see.

Chapter three is titled “our complex world”. Neoliberalism is for people who prefer models that isolate and simplify the supposedly mechanistic dynamics of the ‘thing’ (‘the economy’) they are trying to master, to actual reality. This type is well understood within religious circles.

Religion is all about aspects of our experience that defy total knowledge capture. Religious rituals, doctrines and systems of morality are faltering attempts to respond appropriately to the divine in ways that are liveable in our actual lives. But this is not something that either simplistic or mathematically gifted (and often Asperger’s spectrum) types are typically comfortable with. And so rationalist or naïvely positive systems of theology are constructed that purport to give us full epistemic mastery of the divine. God in a bottle. For example, I have seen the most logically ingenious attempts to make the doctrine of the Trinity, and the divinity and humanity of Christ, rational. It is quite a horror to behold. What ends up easily happening in religions of ‘the book’ is that rationalist and positivistic reductionists worship the doctrinal constructs of their own reason and felt needs, rather than God. This inversion of the appropriate relationship between reality and doctrine happens in economic faith too.

Chapter four is titled “economics, energy and environment.” Now I happen to have written a book titled Theology and Climate Change (Routledge, 2021), so I shall be extremely concise on this point. Keens’ point is very simple, and very important, in this chapter. The laws of nature need to be compatible with our economic models. But, Keen points out, the idea that nature is the free source of all wealth has been absent from economics since the time of Adam Smith. Labour and investment produce wealth in both classical and neoclassical economic theories. Excluding nature is a fundamental mistake. We are now using economic models that presuppose infinite growth, infinite resource availability, an infinite capacity of the natural order to absorb our pollutions and depletions, without system failure. We seem to expect nature to just adapt itself to our models. In contrast, a realistic economics would adapt our models to nature (radical idea!). In economic orthodoxy, such a radical idea really would amount to a reformation.

But note well. The collapse of medieval Christendom did not happen overnight and it did not happen without centuries of upheaval in the very structures of Western European life and power. The new structures of power and social meaning that became the modern technological and capitalist lifeworld only fully flung off the medieval world in the late nineteenth century (and remnants still remain today – go to evensong at St John’s College Cambridge). But by now, we have had a natural plunder mentality assuming a divinely given mandate over nature in our modern industrialized capitalist religion, that has been growing in influence from the time of Francis Bacon, if not before.

Our globalized consumer lifeworld is built on the modern natural plunder doctrine. If we are going to have to abandon that doctrine (which we are) this will entail a similar lifeworld upheaval to the rejection of the medieval theologically integrated Aristotelian outlook on nature from the seventeenth century onwards. Messing with the foundational religious structures of a lifeworld is seriously destabilizing to any existing way of life, and there is enormous power-embedded cultural inertia that resists change in these matters. Reformations are not pretty.

Here I must make a quick comment on the limitation of using the Protestant Reformation as an analogy for upheaving economic orthodoxy. The sectarian Protestant narrative of a regressive and oppressive medieval Papacy is an incredibly simplified and coarse grained narrative. Though I am a Protestant of some sort myself – I am an Anglican – and I am a fan of Luther and some really fantastic Lutherans (Bach, Hamann and Kierkegaard), I do not buy into the standard glorious reformation narrative. The idea that reformed theologians and modern scientists liberated us from all things dark and medieval, and lead us out into the enlightened world of modern technological secularism, is a cultural myth. The historical truth is much more complicated than this cultural myth, and much more ambivalent (after all, it is we, not the medieval, who are killing the planet). However, a reformation in economic faith is indeed urgently needed. Neoclassical economists idealize models of perpetual growth and blindly believe in the self organizing optimal equilibrium of markets. These goals and beliefs are totally disconnected from the natural and human realities of the world in which we actually live. Blind faith in the illusions and purities of Market religion will punish us severely if we do not wake up and reform our basic economic doctrines. Our actual situation is reform or die; one way or the other, this doctrine will not last.

Chapter five is titled “the neoclassical disease.” The basic point here is that neoclassical economic theory, like a bad blind faith, is totally resistant to being contradicted by the simple realities of ordinary and well demonstrated experience. Too true. But the question is, what keeps this faith going if it is not supported by reality? Well, actually, it is supported (even nurtured) by reality – political reality. Neoliberalism is a political religion. More precisely, it is a religion of power.

Religions of power are not the same thing as a complex and often tense arrangement between religion and power. Power and religion have always been intimate. But what separates a religion of power from a religion that is at least partly about power, is the way power itself is understood.

The ancient Sumero-Akkadian cult of Marduk was a religion of power. Slaying and mutilating his mother, usurping his father, and overcoming all his divine siblings, the god Marduk imposed violent male order on primal female chaos and established a safe and prosperous kingdom. Primal struggle, redemptive violence, and unassailable violent and male power, is here seen of as providing the people with civilizational salvation. That is, sheer power (expressed in violence and in wealth) and political authority (justice and moral truth) are identical. The king enacts the energy and power of Marduk. The priest-cast is there to entirely support the power and authority of the king. That is, this is a Hobbesian political realist religion.

Contrast this with the Hebraic idea of the king. God did not intend that the Israelites should have a human king – see Martin Buber, The Kingship of God. The Israelites were to be ruled by judges who were wise in the handling of the divine Law, and who operated within a tribal rather than a royal structure of community power. However, the Lord finally gave in to the people’s desire to be like all the other nations around them, and gave them a king. Not after explaining to them what it would cost them – their children and the best portion of their own labours would be creamed off and given to the king; war, famine, intrigue and other calamities would follow (see 1 Samuel 8). But the land is God’s, the authority to rule is God’s, the law is God’s, and the king must be subject to God. That is, divine authority and human power are not identical. Political authority itself is divine, and it is only mediated through the king, and always imperfectly. With the origin of the Hebrew monarch, the prophets are also born. These outsider figures speak truth to power when the Crown and the Temple become corrupt (which, in thermodynamic terms, is something of a natural necessity, requiring periodic repentance and restoration to fix).

Where authority is divine, then power is always subject to moral and theological scrutiny, from ‘above’ political necessity. When human power becomes opposed to divine justice and the order of God (as is its natural tendency) then this should be denounced, if not by religious officials who have also been corrupted, then by the prophetic voice that God raises up.

Religions of power simply support – with doctrines, ‘moralities’ and rituals of legitimation – whatever power there is. Neoliberalism is the religion of the late capitalist globally corporate imperium. As long as we worship that power, neoliberalism will remain.

Yes, we really need a reformation. We need to shift the collectively assumed focus of worship from power and wealth to justice and truth. A careful analysis of how defective the prevailing economic ideology is – such as Keen’s The New Economics – can really help with that shift. But it cannot cause that shift. The rejection of false gods and a recovery of submission to divine justice and the good order of the world is required for an actual reformation of our economic religion.

[*] In this paper I am going to use “neoclassical” and “neoliberal” interchangeably. There is a technical difference in that “neoclassical” probably best describes an academic school within the discipline of economics, whereas “neoliberal” speaks more of the political expression of that school’s economic doctrines. But, as Michael Pusey beautifully describes (Economic Rationalism in Canberra, Cambridge: Cambridge University Press, 1991) the role of neoclassical economics in politics is now so intimate – at least in Australia – that the two things are hardly distinguishable in practice. As far as I am concerned, the two things are different sides of the same coin.