Faith Based Economy

Something that has further been shown in the current economic crisis is how hard governments, economic experts, and pundits are trying hard to reassure consumers (a.k.a citizens, a.k.a voters) that things won't be that bad (except when it is time to ask for financial help from the government) with the open and deliberate goal to increase consumer confidence and investor's trust in companies and financial institutions so that indicators such as the Dow Jones (supposedly reflecting the "real economy") do not go down. Why is collective delusion so important in keeping up financial markets, "quant shops," and hedge funds? Were financial derivatives and other "products" nothing but a collective delusion? Had Wall Street and other stock exchanges been living in a Faith Based Economy FBE?

Noted scholar and social scientists Arjun Appadurai thinks so,

"we are in a new Weberian moment, where Calvinist ideas of proof, certainty of election through the rationality of good works, and faith in the rightness of predestination, are not anymore the backbone of thrift, calculation and bourgeois risk-taking. Now faith is about something else. It is faith in capitalism itself, capitalism viewed as a transcendent means of organizing human affairs, of capitalism as a theodicy for the explanation of evil, lust, greed and theft in the economy, and of the meltdown as a supreme form of testing by suffering, which will weed out the weak of heart from those of true good faith. We must believe in capitalism, in the ways that the early Protestants were asked to believe in predestination. Not all are saved, but we must all act as if we might be saved, and by acting as if we might be among the saved, we enact our faith in capitalism, even if we might be among the doomed or damned. Such faith must be shown in our works, in our actions: we must continue to spend, to work hard, to invest, and, as George Bush long ago said, “to shop” as if our very lives depended on it. In other words, capitalism now needs our faith more than our faith needs capitalism."


"But Faith, it turns out, is not enough. Capitalism, as a master-belief system, reasonably operates on faith. But markets, especially capitalist financial markets, need something more specific: Trust. And that is the second biggest Revelation of the last few weeks. We have a trade deficit, as we all know, but much worse is our “trust deficit.” No one trusts the (financial) other anymore, we are told, and without trust no one lends and without lending the plastic ceases to work and everyday life comes to a complete halt. This news will come as a shock to all of us on “Main Street,” who trust our friends, our neighbors, our leaders, our churches and our employers as much—or as little—as we did last year. No, trust is not a Main Street problem, it is a Wall Street problem. In other words, banks won’t lend to one another, and that problem in the high mountains of finance is melting down into the valleys and plains of our everyday lives."

Read the rest at "The Immanent Frame"