John Gray’s New York Review of Books review of “Payback: Debt and the Shadow Side of Wealth,” by Margaret Atwood first broadcast by the Canadian Broadcasting Corporation in the Massey of her five first chapters in November 2008. http://www.nybooks.com/articles/22556
In our Capitalistic System, Money has long been both a source of increasing wealth and controlling government. Keep in mind that novelists and poets have long been the source of truth cloaked in fiction, while non-fiction depends a lot on who has power to produce, and select what we see and read, something we all should keep in mind while we watch television news and read corporate newspapers and listen to radio. Follows are some of the contents of his review.
July 13, 2009
... The dislocation that is being produced by the financial crisis affects political and moral beliefs that have supported capitalism in the past. Market economies are not underpinned chiefly by economic theories. They rely for their legitimacy and continued functioning on ideas about right and wrong, fairness in society, and orderliness in the world. In the boom years many of these ideas were discarded as erroneous or redundant. Now that the boom has been followed by bust it may be useful to reexamine ideas about debt, and consider how they may fare as governments use all the instruments at their disposal to avert a slide into depression.
One of the many impressive features of Margaret Atwood's new book is its almost eerie timeliness. Consisting of five chapters that were broadcast in November 2008 by the Canadian Broadcasting Corporation as the Massey Lectures, a series intended to provide a radio venue for the exploration of important issues, Payback appeared in print last October. The book must have been written some months earlier, but there is no sign that it was composed in haste. Atwood examines the role of ideas of debt in religion, literature, and society; she discusses the nature of sin, the structure of plot in fiction, the practice of revenge, and the ecological payback that occurs when human beings take from the planet more than they return. A celebrated novelist, poet, and critic, Atwood has combined rigorous analysis, wide-ranging erudition, and a beguilingly playful imagination to produce the most probing and thought-stirring commentary on the financial crisis to date.
Atwood's project is to show how human thought has been deeply shaped by notions of debt. It will be objected that she is merely spinning out an extended metaphor suggesting analogies between debt and noneconomic phenomena that are only vaguely analogous. In fact she is advancing the contrary and more interesting claim that economic activities involving borrowing and lending are metaphorical extensions of an underlying human sense of indebtedness. Beliefs about debt are not shadows cast by processes of market exchange. They are presupposed throughout much of human activity. Economic life invokes a sense of order in human affairs, widely dispersed throughout society. ...
Sociologists have observed how capitalism developed using ideas borrowed from religion, with Max Weber and others observing how the belief that wealth creation is virtuous invoked Protestant ideas about an elect, divinely privileged section of humanity. As Atwood astutely comments, the conceptual traffic is not just one-way. If economic life trades on religious belief, religion has in turn been shaped by market practices. Religious beliefs about sin and redemption draw on patterns of thinking that partly derive from the practices of borrowing and lending.
Concepts of debt figure centrally in Western religion, while the notion that debt is something to be avoided, or incurred with caution, has long been important in Western capitalism. Without institutions facilitating borrowing, capitalism would not have developed to the degree that it has; but the belief that debt could be dangerous was until recently also an important part of capitalism. It is only lately, Atwood notes, that debt has been celebrated as positively benign, "a thing we've come to feel is indispensable to our collective buoyancy." From being a necessary tool in productive enterprise, debt came to be viewed as an instrument of wealth creation. Using cheap credit, hedge funds and investment banks were able to multiply their profits, while society at large—including some in its poorest groups—came to see taking on large amounts of debt as a way of building up capital. Now that this structure of debt is unwinding, older ideas may be on their way back: "We seem to be entering a period in which debt has passed through its most recent harmless and fashionable period, and is reverting to being sinful." ...
Policies of this sort resemble the proposals advanced in the 1930s by John Maynard Keynes to deal with the Great Depression. Keynes argued that whereas paying off debt in hard times may be reasonable for individuals, it may be irrational for governments, further depressing the economy and increasing the burden of borrowing. Whether Keynes, an extremely subtle and many-sided thinker, would approve of the policies that are being applied today cannot be known. What is clear is that these policies render traditional attitudes toward debt and saving by individuals imprudent. Their goal is to encourage people to borrow more and spend more, and so return the economy to the debt-financed consumption of recent years. Underlying this objective is another—to avoid the danger of debt deflation, the lethal combination of falling asset prices with high borrowing that helped bring about the Great Depression.
Critics often argue that these policies risk sparking inflation at some point in the future. In fact they can hardly be expected to work unless they have this result. Inflation is a sure-fire way of lightening the debt burden, and much of the debt that was contracted in the boom years can probably be paid off only in devalued dollars. But this involves a transfer of wealth from savers to borrowers: those who have borrowed unwisely will benefit, while those who have saved prudently will see their wealth dwindle in value. "Keynesian" policies can succeed only insofar as they have this effect; their impact will be reduced to the extent that people revert to traditional practices of thrift and saving.
From one point of view this is an illustration of a familiar divergence between general welfare and distributive justice. A measure of unfairness is often the price of achieving important objectives. European countries such as the UK that have systems of socialized medicine routinely use cost-benefit analysis to ration scarce and expensive medical resources—MRI scans, for example—a procedure that can involve denying these resources to some who might wish to have them, but that is commonly accepted as justified. The difficulty in the present case is that the unfairness is likely to be far-reaching and intensely felt.
Large sections of the population could find their wealth—already depleted by the decline of the housing and stock markets—shrinking further as the value of money is reduced, while much of the baby boom generation may discover that the comfortable retirement they expected has become an unrealizable dream. In present circumstances there may be no alternative to current policies. But a necessary condition of their effectiveness is a disappointment in reasonable expectations that could be socially disruptive. ... http://www.nybooks.com/articles/22556