Adrian Pabst
University of Kent
United Kingdom

ANALYSIS - January 31, 2012

The year 2011 witnessed a new wave of protest movements and unprecedented popular outrage across the globe.  From the protests in North Africa and the Middle East to the Occupy Wall Street movement in the United States to the camps outside St. Paul’s Cathedral in London and Moscow, demonstrators have expressed a deep-seated anger at global finance that is shared by many[1].

Worldwide, there is an implicit, inchoate awareness that big government and big business have colluded at the expense of the people. Both central bureaucratic states and unbridled markets are dis-embedded from civil society, and civil society is subjugated to the global secular ‘market-state.’ This convergence of state and market can be described as secular because it subordinates human relationships, civic ties, and social bonds to abstract values and standards, such as commercial exchange or centralized regulation. This subjects the sanctity of life and land to the combined power of state and market and threatens the autonomy of civil society and faith groups.

But at the same time, civil society demonstrates a history of resistance to market-state hegemony at both the national and international levels – whether as the US civil rights movements in the 1960s, the civic movements that brought down Soviet communism in the 1980s, or the largely peaceful uprising on the streets of the Middle East and North Africa in 2011. Coupled with the global resurgence of religion, this history of resistance underscores the transformative potential of popular mobilizations that transcend the old, modern divide between secular and religious forces. The rise of the civic accentuates the intermediary institutions of civil society rather than the power of federal authorities or multi-national corporations. By reclaiming the priority of civic community over big government and big business, this idea is gaining currency and beginning to transform contemporary politics.

Such a perspective sees the bonds of civil society and civic culture as more fundamental than either state-guaranteed constitutional-legal rights or economic-contractual ties in the marketplace. As such, the rise of the civic can encourage a shift in emphasis away from notions of individual or general will and towards notions of reciprocal trust, mutual giving, and universal sympathy. Instead of being confined to the ‘third, voluntary’ sector, such and similar principles of reciprocity and mutuality can be applied to the public and the private sector. The result is a 'return of the ethical', as the pursuit of power and wealth is reconnected to social purpose and practices of virtue. In this way, different faith groups and civic associations can work together to re-embed both states and markets in the inter-personal relations of trust and cooperation on which vibrant democracies and market economies ultimately depend.

1. The Secular ‘Market-State’

Why are we witnessing a protest movement that is both global and local? Are there any deeper connections beyond the occupation of symbolic squares or the shouting of similar slogans? In my research, I argue that what we face is a global crisis with local specificities.[2] This crisis is not just financial and economic, but also and above all cultural and ethical. From the outset of the ‘credit crunch’ that started in August 2007, global financial turmoil has revealed a wider moral failure at the heart of the international economy. The prevailing system that emerged in the past thirty years or so has tended to separate responsibility from risk-taking and reward and to disconnect getting rich from doing good.

Far from being purely accidental, this evolution can be traced to a wider set of structural shifts that have changed the behavior of individuals, companies, and states. After 1945, the United States and other Western nations were committed to an economic model that the American theorist John Gerald Ruggie described as ‘embedded liberalism’.[3] This model aimed at achieving full employment and social welfare at home, as well as international trade, managed exchange rates, and regulated capital flows abroad. Since the breakdown of this Keynesian settlement in the 1970s, sovereign national states have been supplanted by globalized ‘market-states.’

Sovereign national states provided public investment and a basic safety net for the unemployed, the sick, and all those unable to help themselves. By contrast, globalized ‘market-states’ maximize client and consumer choice by opening up virtually all levels of the national economy to international finance and trade, as the American historian Philip Bobbitt has suggested.[4] This shift in sovereignty from an international system of nation-states to a global order of ‘market-states’ coincided with a structural transformation of the world economy and global governance – the post-1945 Bretton Woods settlement of fixed exchange rates, regulated trade, and capital controls gave way to the post-1971 emphasis on floating exchange rates, free trade (e.g. NAFTA), and ever-higher capital mobility.[5] This transformation has further weakened the capacity of sovereign states to insulate their domestic democratic processes from international economic developments, and it goes a long way towards explaining both the impact of financial globalization and the popular reactions against its ensuing economic devastation and social dislocation.

‘Market-states’ provide the conduit through which political sovereignty and economic transactions are conflated with each other and gradually abstracted from the social relations and civic bonds in which they were traditionally embedded. Crucially, this is not a right-wing versus left-wing issue; ‘market-states’ do not fit into these or other binary poles. They are instead characterized by a series of paradoxes: the combination of a strong state with an unfettered market, centralized authority with dwindling power, greater popular demands with less civic mobilization and participation, and less welfare with more state protection against risk. As Philip Bobbitt rightly remarks:

The market-state will live within three paradoxes: (1) it will require more centralized authority for government, but all governments will be weaker […] (2) there will be more public participation in government, but it will count for less, and thus the role of the citizen qua citizen will greatly diminish and the role of citizen as spectator will increase; (3) the welfare state will have greatly retrenched, but infrastructure security, epidemiological surveillance, and environmental protection – all of which are matters of general welfare – will be promoted by the State as never before. These three paradoxes derive from the shift in the basis of legitimacy from that of the nation-state to that of the market-state.[6]

Here one can go further than Bobbitt and other contemporary theorists and suggest that the ‘market-state' specifies a distinctly secular arrangement.

The reason is threefold. First, the 'market-state' presupposes an increasing centralization of power and concentration of wealth at the expense of local government, small- and medium-sized businesses (that are often family owned), and the autonomy of civil society as a whole. As such, the power of states and markets transgresses the civic and ethical limits that have been defended by different religious traditions. Second, the ‘market-state’ invests the secular sphere of power and wealth with quasi-sacred significance by sacralizing either politics or economics, and often both at once. For example, the idea of a gospel of wealth risks conflating the rich and powerful with the elect, thereby subordinating both theological and civil virtues as well as religious and civic practices to the spirit of acquisitiveness and the commercial society.[7] Third, the ‘market-state’ subsumes the sanctity of life and land under the sacrilege of power and wealth.  One can argue that the secular settlement of the global ‘market-state’ profanes the sacred and sacralises the profane.

2. The Rise of the Civic

Much of contemporary politics and policy-making views the institutions and practices of civil society either as extensions of the central state (in Western Europe) or sub-sections of the unfettered market (in much of the Anglo-Saxon world). This subordinates social bonds to uniform state law and proprietary market relations.  By absorbing the intermediary and self-governing groups that compose civil society, the central state and the market collude to subject all societal relationships to formal standards of rights or monetary value. Such standards are often uncompellingly abstract when compared to the real, embodied relations of family, friendship, community, habit, ritual, and celebration that are central to different religions and cultures.

Moreover, the purpose and scope of voluntary, civic activity is severely constrained – it merely compensates for state and market failures rather than supporting the autonomy of the local communities, faith groups, and civic associations that constitute civil society. Even when this autonomy is acknowledged, it is nevertheless the case that philanthropic giving and social enterprise are seen as a ‘third sector’ which is wholly separate from state politics and for-profit business or subservient to both.

However, if the current cuts to public spending in the United States and in Europe are not just about retrenching government or expanding corporate cartels in the private sector (and increasingly in the provision of public services too), then both the central state and the unbridled market must be radically restructured to support rather than undermine civic institutions. Only by re-embedding the state and market in mutual social bonds and democratic relations can the civic properly emerge and flourish without co-option by any single political or economic power.

For concrete examples of how to translate principles of reciprocity and mutuality into transformative practices, existing grassroots movements and civic initiatives are far more instructive than contemporary government policy. Take for instance London Citizens[8], a recently founded civic organization that brings together about 150 different local communities, associations, and faith groups under the umbrella of Christian social teaching. In a short time, this organization has achieved some important policy goals:

(1) Persuading both City Hall (London’s elected assembly and municipal administration) and corporate businesses to pay the ‘living wage’ rather than the minimum wage.[9]

(2) Helping to offer a much more hospitable treatment of migrant workers and asylum-seekers than either public authorities or private companies;

(3) Introducing voluntary caps on usurious interest rates in connection with certain credit and store cards, coupled with a robust campaign against ‘loan sharks’ and unreasonable bank charges

By proposing ethical limits on state and market power, limits that resonate with people of all faiths and none, London Citizens embodies a new politics that transcends the old divide between purely secular ideologies and exclusively religious movements. Instead, London Citizens combines ideas derived from Christian social teaching with the practices of community-organizing developed by Saul Alinsky, the American activist who inspired teh young Barack Obama in Chicago. These two traditions share a concern for the social bonds of mutuality and reciprocity that are necessary for the flourishing of persons, communities, and local businesses.

Other instructive examples can be found in various lay Catholic charismatic movements, including the Focolare’s “Economy of Communion.” This new civic model, operating in Brazil, Portugal, Italy and elsewhere, brings together businesses, social enterprise, and educational institutions in impoverished areas to create a local economy that blends private profit with social purpose.[10] Business profits are reinvested in the community for three distinct reasons – to create jobs in neglected areas that have been abandoned by the central state and the unfettered market, to institute, broaden, and deepen a “culture of giving” grounded in human relationships of mutual support, and to sustain and expand the business that must combine efficiency with solidarity. This combination of investment and charitable giving seeks to change the market from within by locating the logic of gift-exchange at the heart of ordinary economic processes. According to some estimates, 735 businesses have joined such “Economies of Communion”, with a majority in Europe (notably Italy and Portugal) and more than 245 in the Americas.

Both London Citizens and the “Economies of Communion” reject top-down, command-and-control state power and promote civic and ethical limits on unbridled market capitalism in order to foster reciprocal trust and mutual giving. These models have the potential to make both the state and the market more mutual, something that economic orthodoxy rejects as dangerous and deluded precisely because it challenges the duopoly of big, centralized government and big, oligopolistic business.

It is precisely this duopoly that the nascent global protest movement is targeting, as I have already indicated. The demonstrations now sweeping the world transcend single-issue campaigns, social movements, and political protest.  They imagine instead a broad, civic community that seeks to re-establish the priority of the social over the economic and the political by re-embedding states and markets into the civic bonds and interpersonal relationships of civil society. As such, contemporary civic mobilization seeks to break down the barriers that shield governing elites from democratic accountability by pursuing a politics of the common good in which all citizens can participate. In this way, the global protest movement attempts to reassert civic control over the economy and politics, democratize both states and markets, and reintroduce popular participation into political representation. This 'rise of the civic' grounds the rights of groups and individuals in practices of mutual help and reciprocal responsibility.

3. The Return of the Ethical

So far, the expressions of anger are as diverse as the demonstrators’ demands are vague. This  is why the call by various Jewish, Christian, Muslim, and other religious figures in the United States and Europe for a new debate on specific action is so important. Diverse faith traditions and civic movements all recognize that global finance is disconnected from ethical or social goals. Governments on all sides of the ideological spectrum have replaced mutualist arrangements among workers with centralized, bureaucratic welfare and outsourced the delivery of public goods to private service providers.  The complicit collusion of big government and big business has brought about a system that privatizes profit, nationalizes loss, and socializes risk. From the outset, the global economic turmoil has merely been a symptom of a much larger moral crisis demanding a proper ethical response.

More specifically, religious faith reminds us that we must not judge any economic system simply on its own terms (growth rates, prosperity, and equal opportunity), but by the  criteria of a perennial human desire for the common good that dimly reflects the eternal principles of justice, equity, and the supernatural Good in God.  From this perspective, the economic values of the global ‘market-state’ appear questionable.  Unlike previous economic models, it has lifted millions out of abject poverty and provided unprecedented opportunities for many. But it has also created a new dependency on global finance. The trouble with global finance is not just that it makes money out of money, engaging in dubious practices of usury on a planetary scale.  Indeed, internationally mobile capital must ultimately be secured against real value as property or natural commodities.  The real trouble is that it simultaneously pursues short-term profit by speculating with real value, which injects volatility, uncertainty, and instability into local economies.

Global finance oscillates between financial abstraction from the material world on the one hand, and necessary reconnection with the real economy on the other.  As such, it separates material things from their symbolic meaning and their moral value. Instead of viewing the worth of objects as intrinsically added by human labor, global finance reduces worth to purely material value – the sheer extent to which goods and services can be exchanged as commercial commodities.  As a result, global finance uproots both products and producers from their embeddedness, as the Christian thinkers R.H. Tawney and Karl Polanyi argued.[11] In this way, unfettered markets weaken real, reciprocal relations among actually existing human beings and the objects of the natural and social world. Ultimately, globally mobile capital privileges discrete, individual objects at the expense of the social, cultural, and religious structures that bind them together, as a number of anthropologists working on notions of gift-exchange have shown.[12]

Thus, the ethical imperative is to restore a measure of rootedness and to promote relationships of genuine meaning by respecting the inviolability of the supernatural.  At the moment, both mainstream politics and the economic world seem wholly incapable of meeting this moral challenge. With significant increases to managers’ pay and bankers’ bonuses in the midst of a fledgling economic recovery, there is a widespread perception that both Wall Street and the City of London are back to business as usual. Moreover, developed economies and emerging markets alike are increasingly characterized by growing gaps between the rich and poor and between the values of the economy and the values of society.

Yet at the same time, there is growing evidence to suggest that more ethical business is better business, and that a virtuous economy is more economically and environmentally sustainable.  Ethical business combines social purpose with commercial purpose and creates the trust, integrity, and honesty on which mutually beneficial cooperation depends. Likewise, there appears to be a positive correlation between more economic equality, greater social cohesion, and increases in national wealth. What is urgently required is a robust public debate and concrete, transformative action.

Faith groups and civic associations are uniquely positioned to lead such a debate. Religious communities do not just provide a space where righteous anger can be put to concrete use, they also link the growing popular discontent to fundamental moral questions demanding fresh answers. Neither state laws nor business regulations can by themselves instill the virtuous behaviors on which a good economy depends, such as integrity, honesty, mutual trust, or reciprocal respect.  Religious traditions can go beyond purely secular models to link the market's moral foundations with notions of virtue and the sacred. Far from being utopian, such a perspective combines strict ethical and civic limits on the power of ‘market-states’ with the pursuit of the common good in which all can share. This is an ideal that resonates with many features of the broad civic movement, including the tradition of town-hall democracy and free, voluntary and self-governing associations. Together, these groups can promote an inclusive form of humanism, often religious in inspiration, that develops in the direction of a civic politics.

4. Concrete Ideas for Faith-led Action and Civic Campaigns

Taken together, faith communities and civic movements share a number of principles that could be translated into concrete shared action:

(1) Debt forgiveness

Debt remains the single most serious economic problem besetting the United States and Europe. Neither cuts to public spending and private consumption nor growth will enable the poorest among us to escape the vicious circle of indebtedness.  But the Old Testament speaks of periodic debt forgiveness: the year of "Jubilee." A 2000 campaign led by various religious groups, faith communities, and civic associations championed this practice of partially or fully forgiving debt, and their example could offer a model for addressing present crisis.   In this manner, debt is no longer equivalent to wealth and real value – just as evil is not equivalent to the good but parasitical upon it. By forgiving debt, we interrupt the vicious circle of debt that erodes real value and impoverishes society.

(2) Debt conversion

Since the debt of some represents the credit of others (their savings and investment), not all debt can be written off. But debt can be restructured to the benefit of both debtors and creditors.  The maturity of debt can be lengthened and the interest charged can be reduced, thereby making debt more sustainable and guaranteeing repayment (e.g. for consumer debt). Or else debt can be converted into equity, and thereby risk and profit can be shared (as is the case with the so-called "Islamic" mortgages that eschew interest in favor of equity transfer).

(3) Caps on usurious interest rates

Interest charged on mortgages, credit cards, consumer loans, and shopping cards is often usurious. As such, it is both ethically wrong and economically counterproductive in the long-run. Faith groups and civic movements can argue for voluntary caps or statutory regulations to limit such exploitation and reintroduce a sense of virtue and honor in lending practices.

(4) Fair wages and fair prices

Personal debt in the United States and Europe stems in large part from the stagnation and even decline of real wages, linked to increases in the costs of living for most ordinary people due to the volatility of prices caused by commodity speculation.  To increase the purchasing power of citizens, employers’ associations and workers’ representatives should consider introducing fair wages and just prices that are sector-specific and linked to productivity. That would provide both positive incentives and rewards for better performance and higher quality products and services, thus creating a virtuous circle.

Concluding remarks

The collusion of big government and big business in Western economies has produced a global ‘market-state’ that is secular in character.  It subordinates the sanctity of life and land to the false sacrality that results from pursuing power and wealth for self-aggrandizement rather than the common good   In my research, I argue for a radical ‘middle’ position that transcends the modern divide between an exclusively religious and a strictly secular perspective. Faith can lead to strong notions of the common good and a belief that human behavior, when disciplined and directed, can start to act more charitably.

There are also secular intimations of this – the more that faith-inspired practices are successful even in secular terms (e.g. more economic security, more equality, more sustainability and greater civic participation), the easier it will be for institutions to work within the framework of common virtues without having to fully embrace their religious basis.  From this perspective, both faith communities and civic movements can join together in their efforts to reconnect the economic and the ethical. Their ultimate aim must be to preserve the sanctity of natural and human life by promoting human relationships that nurture the social bonds of trust and reciprocity on which both democracies and market economies depend.

[1] See my essay, ‘The Resurgence of the Civic’, available online at http://blogs.ssrc.org/tif/2011/11/29/the-resurgence-of-the-civic/

[2] Adrian Pabst, ‘The Crisis of Capitalist Democracy,’ Telos, No. 152 (Fall 2010): 44-67; A. Pabst, ‘Modern Sovereignty in Question: Theology, Democracy and Capitalism,’ Modern Theology, Vol. 26, No. 4 (October 2010): 570-602.

[3] John Gerald Ruggie, ‘International regimes, transactions, and change: embedded liberalism in the postwar economic order,’ in Stephen D. Krasner (ed.), International Regimes (Ithaca, NY: Cornell University Press, 1983), pp. 195-223.

[4] Philip Bobbitt, The Shield of Achilles. War, Peace and the Course of History, (London: Penguin, 2003), pp. 213-242. See also Richard Robison (ed.), The Neoliberal Revolution: Forging the Market State (Basingstoke: Palgrave Macmillan, 2006).

[5] Barry Eichengreen, Globalizing Capital: A History of the International Monetary System, 2^nd ed. (Princeton, NJ: Princeton University Press, 2008).

[6] Bobbitt, The Shield of Achilles, pp. 234-5.

[7] Prominent examples in the United States include John Cotton, Cotton Mather, Solomon Stoddard, Jonathan Edwards and much later, Andrew Carnegie’s Gospel of Wealth. On Calvinism as the link between American capitalism and liberalism, see H. Richard Niebuhr, The Social Sources of Denominationalism, repr. (New York: Holt, 1957), esp. pp. 94-95 where he suggests that there is a “harmony of the Calvinist conception of individual rights and responsibilities with the interests of the middle class” and “Laissez-faire and the spirit of political liberalism have flourished most in countries where the influence of Calvinism was greatest”. William E. Connolly, Capitalism and Christianity, American Style (Durham, NC: Duke University Press, 2008), pp. 17-68.

[8] Austen Ivereigh, Faithful Citizens. A Practical Guide to Catholic Social Teaching and Community Organising (London: Darton, Longman & Todd, 2010).

[9] The concept of a ‘living wage’ was developed by the American Catholic thinker John A. Ryan, in his book A Living Wage. Reprint (Whitefish, MT: Kessinger Publishing, 2007 [orig. pub. 1906]).

[10] See Lorna Gold, New Financial Horizons: The Emergence of an Economy of Communion (New York: New City Press, 2010).

[11] R.H. Tawney, Religion and the Rise of Capitalism, rev. ed. and intro. Adam B. Seligman (New Brunswick, NJ: Transaction, 1998 [orig. pub. 1921]); Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon Press, 1944).

[12] Jacques Godbout and Alain Caillé, The World of the Gift, trans. Donald Winkler (Montreal: McGill-Queen’s University Press, 1998); Jacques Godbout, Ce Qui Circule Entre Nous: Donner, Recevoir, Rendre (Paris: Editions du Seuil, 2007).