It’s A Crisis of Faith Not A Crisis of Stocks
Published on: May 7, 2010
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  • Pingback: Instapundit » Blog Archive » THE GODS OF BRUSSELS ARE FAILING: Walter Russell Mead: It’s A Crisis of Faith Not A Crisis of St…()

  • Katherine

    There are no gods in Brussels. There are only men. This is what happens when you treat your citizens as infants, and pretend that the government can be mommy and daddy.

    They don’t want to pay for anything, as I understand it the Greeks have a tax avoidance culture. They want the rich, creamy Nugent of public service, but they don’t want to pay for it. Here we all are

    They’ve run out of other people’s money and don’t want to pony up their own; my six year old feels the same way when told he must pay for candy out of his tooth fairy money.

    I will turn to Jerusalem, even if no one else does.

  • WigWag

    Professor Mead, if you want the perfect illustration of the frailties of human nature that you allude to in your post, my suggestion is that while you’re in Jerusalem you should take a walk in the Old City to the Church of the Holy Sepulcher.

    Here, on the site where legend suggests that Christ was crucified, the Christian sects that venerate the Church co-exist in anything but harmony. As often as not, rancor, suspicion and even violence is the norm between the Roman Catholic, Eastern Orthodox, Armenian Apostolic, Ethiopian Orthodox and Coptic churches that govern the holy site.

    Fist fights and riots are not uncommon between the religious sects who jealously guard their “territory” inside the church and in 2008 the violence between Armenian and Greek monks became so severe that several serious injuries were inflicted and ambulances had to be called.

    I can think of no more perfect metaphor for the human failures you talk about in this post than the behavior of the guardians of what many believe to be Golgotha.

    It’s all quite depressing. If after many centuries, Christians can’t come to an accommodation on the spot where Christ was crucified, how are Jews and Palestinians supposed to amicably resolve their differences? Or Germans and Greeks? Or Shia and Sunni?

    Both faith and enlightenment values are meant to steer humanity away from the darkness and towards the better angels of our nature. But they do so imperfectly because human beings are so imperfect.

  • Gene

    You’re trying much too hard to see the forest and ignore the trees here. This attempt to look at all this from 10,000 feet adds little to the debate because your broad overgeneralizations don’t work. At the tree level, there are many, many people — economists, demographers and others — who understand where we are and why, and in many cases have been warning about this state of affairs — or something like it– for a long time. Also, what does “turning to Jerusalem” mean? Really, laden as it is with sweeping statements that reflect something that looks like popular, uninformed apocalyptic “thinking,” I don’t see how this moves the debate.

  • noahp

    C’mon man. Obama is not following the best thinking in economics. Summers and Romer would be harshly critical if Bush was doing the same things and they were back in their ivory towers. Krugman was exposed as a hack when he criticized a Senator as being in an alternate universe for saying that unemployment benefits were undermining job recovery but his own textbook says the same thing!

    I wish we could have sound economic policies untainted by crony capitalism, neo-marxist ideology, progressivist utopianism, payoffs to unions, etc, ad nauseam, ad nauseam.

  • Bruce

    Greetings WRM: appreciate the article’s intent, but I wonder why you seem so sad at the thought that high hopes for the appearance of a better class of central controlling elites – ones that are effective in guiding us to a smoother future – are not in evidence and likely never will be? You accuse economists of failing to provide guidance here, but this completely ignores the Nobel-acknowledged work of Hayek and Freidman, who, in a nutshell spell out the impossibility of centrally planned success. I would hazard that the crisis of faith here your declaim is not shared by many, who are more than ready to make their own decisions and live with the consequences of their actions, even if an elite didn’t sanction their plans. Good luck with your search! I agree, we all need something to believe in. Kind regards, Bruce

  • M. Report

    Been reading W. B. Yeats ? 🙂

    I prefer John Myers Myers ‘Silverlock’,
    in which our Hero is tempted to despair by
    Faustopheles, and rescued by Orpheus,
    who forces even Satan, a Liar from the first,
    to admit the original truth:
    “There is Good…I remember it.”

  • David W. Lincoln

    When arrogance and laziness are behind the wheel, as I surmised when I watched, “Inside
    the Collapse” which aired on 60 Minutes, earlier this year in March, this essay augments that, and vice versa.

  • AD

    The Fallability of Economists:
    More and more I think back to Harry Truman’s desire to find a one-armed economist.

  • Norm

    Dr. Mead has offered a vision of the issues that focusses on the clouds, but I think a lot of Thursday’s debacle was much more mundane. One of the features of contemporary markets is high frequency trading where computers are instructed to make trades of huge quantities of stock on razor thin margins almost without human intervention. What happened on Thursday is that the overwhelming majority of the volume was just such high frequency trading [HFT] that led to a total swing in the market of over 1000 points in roughly one hour.

    The main argument in favor of HFT is that it improves liquidity by finding a ready buyer and seller for every transaction. However, when HFT ceases to supplement a market and becomes the dominant force in the market it runs the risk of disguising the true value of equities amidst the “froth” of the computerized trading. The other counter-argument against HFT is the “tightly coupled” nature of the trading. If things start to go wrong, billions of dollars of value are wiped out before humans can intervene.

    In the short run governments all over the world have spent money they didn’t have to avoid immediate pain. Because most of the money was politically directed, a distressingly large fraction of that money was spent on ameliorating the pain of politically connected interest groups instead of setting a foundation for the economy as a whole to recover. This segues usefully in Dr. Mead’s discussions of the Blue social model.

    In the medium run, the nations will exhaust their borrowing capacity leading to a choice of inflating away debt versus imposing austerity to repay the debt. This will be disconcerting for most people and the unpredictable consequences of how people and nations will respond to this situation will stress everyone. Here, I find myself agreeing with Dr. Mead’s conclusion since “the bottom really will fall out of things” is a perfectly good first order approximation of what we’ll be living through. Personally, I’ll be Janus-faced – looking both to Athens (logic) and Jerusalem (faith) for the inspiration to find my way forward.

  • Bonfire of the Idiocies

    Twenty years ago, Fukuyama wrote of “The End of History”. Gosh, those words are starting to look like irony… not unlike when the builders of the Titanic declared “not even God himself could sink her.” Aaargh.

  • Seerak

    What you are observing, is that Enlightenment reason is dominant in certain fields (technology, engineering etc.), but is oddly inactive in others (politics, and morality).

    What makes no sense whatsoever, unfortunately, is your leap from this observation to the conclusion that the “rational, liberal enlightenment “has not done much to help us master ourselves or to shape our destiny”, as if it had tried and failed in these respects.

    This is exactly backwards. Rather, the failures of the humanities are the results I would expect to see in those fields where rational Enlightenment has never trod. How could it, when it was extinguished long before most of the humanities ever began?

    It was aborted by the persistence of the premise that there are certain things that reason cannot touch, that we must render unto reason the things that are reason’s, and render unto faith the things that are faith’s. The root of this premise is the ancient idea that reason is “limited”, in particular in its inability to deal with morality (or spirituality), and that we need faith to fill the gap. Since reason deals with what is (reality), this assumption goes, it is incapable of determining what ought to be — the is-ought dichotomy.

    As that antecedent premise is the conclusion you reach, you have not identified any fact of reality, but merely reaffirmed the causal idea behind it all, making your argument circular.

    This ancient error ultimately underlies all faiths since the dawn of time, but its modern form finds it origins in the work of one Immanuel Kant, whose explicit goal in rescuing and re-entrenching it was to abort the Enlightenment in order to save religion — as he wrote: “I have found it necessary to deny knowledge in order to make room for faith”.

    So, it should be no surprise that all those fields that deal with human beings — with entities endowed with reasoning minds, and with free will, and who therefore are driven by ideas of what they *ought* to do — should be such disasters as they are.

    While fundamentally wrong, your characterization of the Enlightenment as being its own sort of “religion” is accurate in one sense: the extent to which the humanities are dominated by a religion (i.e. subjective, arbitrary, irrational “thinking”), is the extent to which they fail. I submit the Left in its entirety as proof.

    And that brings us to the single historical phenomenon which blows this premise sky-high, the one time in history where men openly and successfully derived “ought” from “is” in the political realm — and tellingly, it’s a product of the one strain of Enlightenment thought which you did not name: moral individualism.

    Individualism is the strain of Enlightenment thought that culminates in the principle of individual moral sovereignty, the principle that it is up to each individual to discover what he ought to do, by means of his own reasoning judgment — and that each individual ought to be free to follow that judgment without interference from others.

    It was once known by the term “Liberalism”, but as is plain in the examples that you subsume thereunder, that this isn’t what you are talking about. You are using that term in its modern meaning, co-opted by the Left into something inimical to liberty, something which has much more in common with Marxism and with theocracy than with any Enlightenment thought: the moral subordination of the individual to “something greater than himself”.

    Moral individualism — and its root: rational morality — was the potentiality of the Enlightenment which Kant feared and sought to abort — that reason would resolve the is-ought barrier, rendering religion superfluous and the individual sovereign.

    He was right in this anticipation, as we see in that greatest refutation of the is-ought dichotomy which is America — the first and so far only nation founded on certain principles of what ought to be (liberty) based on a foundation of factual information (the nature of human beings).

    America stands as the great historical refutation of the “is-ought” barrier, and of those creeds that presume it. Its founding principles are the last fruit of the genuine Enlightenment, before the latter was mutated by Kant and his “limiting” of reason, into that creature we now know as the Left.

    You are correct that it is a religion that fails us, sir, but whatever that religion is — whatever it is you are referring to as “rational, liberal enlightenment” — it is not the Enlightenment. That flame was extinguished over 200 years ago, by that patron saint of made-up belief systems modern and ancient: Immanuel Kant.

  • Marty

    Kipling wrote everything that need be read on this subject over 90 years ago:

  • Excellent and insightful column. Technique – William Berrett had a great book entitled “The Illusion of Technique” first published in 1979 and still relevant.

  • john

    “Yet it seems less and less likely that we will ever have the kind of economics of which we all dream: a set of ideas and formulae that when followed yield automatic and growing prosperity.” Undoubtedly this is true unless there is a future Hari Seldon who will invent a working psychohistory as described by Isaac Asimov in his Foundation series. However, there appears to be a promising discipline of historical research that deals with periodic cycles and generational/demographic dynamics that might provide useful guidelines for public policy, historical cycle theory.

    The original concept can probably be credited to Marc Bloch and Fernand Braudel from the Annales school and the concept of the “long duree.” The long duree idea focuses on the long-term structures that underpin, and help explain, the flow of events. The concept of underlying structures as led to further research on various cycles of history and, most recently, the theory of generational dynamics.

    A comment is no place to waste time with details, but one place to start if you wish to see how far cycle theory has progressed is to find a copy – available online – of the 59 page “A Brief History of Human Evolution and Economic Progress” by Harry Dent. The short book examines history in terms of various kinds and lengths of natural human cycles from 100,000 BC to about 2050 AD.

    The book was copyrighted in 2004. Just to give you an idea of the contents, here is a selected portion from toward the end of the book: “If we look at all of our long-term cycles only one is clearly still pointing up – the 500- year cycle. The 1,000-year boom cycle and the 3,000- year Western Civilization cycle are all nearing a peak – but the time frames there could obviously extend further out. More ominous, the 230- year bull market (300-year cycle), the 80-year Growth Boom cycle and the 40-year Spending Wave cycles all look to clearly peak by 2010 in the U.S. with the crescendo of technological innovations of the massive baby boom generation also by 2009. That would suggest, along with other indicators we have, that we may see a peak in our stock markets that will be the last for the rest of our lifetimes and even most of our kids’ lifetimes in the U.S., Europe and Japan.”

    The cycle theory of history seems to be able to shed some valuable light on both the connection between past events and, perhaps more importantly, give us some insights which could prove valuable in avoiding public policy pitfalls and prepare for likely future changes in societal conditions. To date, these ideas conflict with the dominant wisdom amongst the professorial elite so little real peer reviewed examination has been conducted for fear of sacred oxes being gored. As a consequence the public is largely unaware of the theory and its ideas. But it’s worth checking into.

  • DougE

    Just a note on the Tower of Babel: it never “fell”. The good citizens on the Plain of Shinar purposed with one mind to thwart God’s directive to fill the earth. But God created something new for them to think about: Languages. They simply stopped building the city and the tower and the enterprise blew away in the hot desert wind. One supposes some Shinarians would have stayed on, toiling in their stupidity and intellectual superiority, and probably a few of them did, those who could communicate. Most just wandered away or fled. God is the very imaginative Creator and He touched each one of those persons and gave them a new gift. Babel was an act of human folly, brutal and tyrannical on the one hand, and the act of divine mercy, imagination and creative response on the other

    Jerusalem you say provides the answers and is the example of human striving. But if memory serves it was the leaders and occupants of that fair city that came together, with one mind, in an effort to thwart the One who could put a stop to all the endless striving. They screamed “We have no King but Cesar!” They shouted it long and loud. But once again mercy, creativity and imagination prevailed in the Resurrection and New Creation.

    Now we come together with another single-minded purpose on the Plain of Liberal Democratic Capitalism, armed with electricity and computers. I wonder what God has in store for us this time?

  • jbay

    You had a wonderful ending to your post that was truly inspiring. It reminds me of the story of the phoenix, which can be found in one fashion or another all across the world.

    The only thing I took issue with, “which you were probably not saying seriously”, is your treatment of economics and the enlightment as gods.

    While I’m well aware of the many mis- conceptions people have of the enlightement I will continually point to what her founders actually wrote. The writings of Bacon, Hume, Adam Smith and even Voltaire are littered with a belief in God. That Voltaire and many of his age criticized the church is not proof of a false idolitry. The churches selling of forgiveness and open acceptance of torture on the other hand… was.

    “A little philosophy inclineth man’s mind to atheism, But depth in philosophy bringeth men’s minds about to religion” (Bacon)

    “Religion is everywhere different because it comes from Man, but morality is everywhere the same because it comes from God” (Voltaire)

  • Ugh. “The religion of Enlightenment” is worse than the “atheism is a religion” canard. The Enlightenment is a direct repudiation of the control the Christian church had over Europe for centuries and centuries. It didn’t seek to ban religion, but it did seek to banish it from certain domains, especially science, but from sectarian influence in politics and government, too.

    Do you see any institutionalization of the Enlightenment? Do you see any doctrine or dogma? What teeny smidgen of the Enlightenment resembles religion?

    “swept through the world faster than any of the faiths of the old prophets.” BS! Excuse me, but unless your definition of “world” is WASPs, that is a ridiculously false statement. What percent of the world’s population even know what the Enlightenment is/was? But even accepting that egoistic definition the statement is dubious. Do Enlightenment ideas and/or principals hold much appeal in America today outside of science and academia?

  • Fen

    The price for rendering unto Caesar what belongs to God. We have displaced our spiritual faith into man-made institutions.

  • “And yet, still, somehow, the global economy seems not to be working particularly well; more than that, the world’s economists don’t seem particularly good at either predicting economic behavior or preventing disasters.”

    To paraphrase, the economists are always fighting the last economy.

    The much touted and much pushed rush to globalization has left us a world in which there are no bulkheads.

    Think of an aircraft carrier — a self-contained world of many functions — but one built without watertight bulkheads. This means that if any section of the ship is holed the water will eventually flood the entire hull. There may be a large array of pumps to slow the process. The carrier has enough hands to put them on to the task of plugging the leak. And this leak or that may surely be plugged and the pumps run and the ship sail on. But the more leaks or the larger the leaks and sooner or later the sea overwhelms the tools and the crew, the ship wallows, flounders, and sinks.

    That’s when the belief in the Lord and the prayers come back. But, alas, a little bit too late.

    Financial, technical, or social Armageddon? Who knows, but maybe “next year in Jerusalem.”

  • Brian H

    Economics can never be calm and predictable, because the best place to make money is on the very edge of failure. If we could guarantee no one went over the edge, then it would not actually be the edge, and people would push on until they found it. Usually by trial and error.

  • K2K

    “…Barely two hundred years after its birth, the faith in progressive modernity had conquered the world….”

    Perhaps too many believed the world had been CONQUERED by progressive modernity.
    All faiths seek solutions of some sort.

    I shall keep my real thoughts for tomorrow, when I can see the only reality, the view from my window, of a young oak tree, and deep fuchsia lilacs in bloom.

    Thank you for helping me frame a lifetime of failing to have faith in any faith. Which is why I seem to prefer to read history.

  • Luke Lea

    “The IMF, the World Bank, the central banks of the leading economies, have never been so well staffed with so many well trained economists.”

    Chalk it up to Paul Samuelson. It was under his influence that the language of higher mathematics replaced clear logic and lucid prose as the means of communicating economic truths.

    He actually convinced the world that in that respect economics was a hard science like physics and therefore deserving of its own Nobel Prize (he won the first one!)

    Meanwhile, the two truly gifted economists of his generation — Maynard Keynes and Milton Friedman — who were masters of logic and prose (and in Keynes case a better mathematician than Samuelson would ever be) deplored these developments and said so in public. But nobody listened.

    Or in the immortal words of Warren Buffet, “Beware of geeks bearing formulas.” The age of financial engineering is over. Dear God, bring back the old art of political economy. And please do it quickly.

  • The problems of chaos (mathematical) can rarely be solved. And chaotic problems are for the most part system problems.

    We have politicians who don’t understand this. (Why should they? Most of them are lawyers.) The result if this is that the incentives are wrong.

    This happens because the electorate does not understand mathematical chaos either.

  • John

    “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

    F A Hayek
    The Fatal Conceit

  • john galt

    Trends point to a systematic failure. The only way things will change is if governments and their currency machines just completely collapse soon. Then people will get their change. Things have to get a lot worse before they ever get better.

  • PetraMB

    Luke Lea, thanks for the great Warren Buffet quote — I didn’t know it, and now passed it on to my economist husband…

  • “Like the other religions, the Enlightenment faith comes in several flavors. Its two main denominations were Marxist and Liberal. By 1960 about one third of the world’s people lived under governments who claimed to believe that Marxist social science and modern technology would usher in a golden age of global peace and abundance. Most of the rest of the world lived under one or another form of Liberalism, believing that free markets plus liberal political institutions and modern technology would bring in the golden age.”

    This thesis might fly in a HS English class, but anywhere else it’s a gross dichotomy and patently false to boot. Very few people in the Southern Hemisphere saw a Golden Age* on the horizon in 1960, for one simple example.

    And both categories are amazingly reductive or incredibly sweeping generalizations:

    First, your statement about the Marxist third is technically true, as you limit your subject to “governments who claimed to believe” in Marxism. But doesn’t that make the statement meaningless in practice? Don’t the hundreds of millions of collectivized farmers in the USSR and China count for anything? Do you think they supported what their governments claimed to believe?

    Second, how many countries in the non-Marxist two-thirds had liberal political institutions? A few. Or even “free” markets? As far as international trade, the answer is nobody.

    I’m also very interested in where you would put 1960 India in this dichotomy. That country and it’s 1/8th of the world’s population at that time is by itself enough to disprove your thesis.

    * This is also a religious characterization again, in this case specifically mythic. Aren’t the Enlightenment and myths diametrically opposed on their face?

  • “liberal modernity has succeeded as a way of organizing human society for greater productivity and power, it has failed as a religion.”

    That’s because it’s not a religion! The Pittsburgh Penguins also failed to with the Super Bowl this year, btw.

    “The rational, liberal enlightenment has helped us master the forces of nature (though events like the oil spill in the Gulf remind us that we still have much to learn in this respect), but it has not done much to help us master ourselves or to shape our destiny.”

    The oil spill in the Gulf is not a force of nature! It’s a 100% man-made disaster! And what has helped us master ourselves or to shape our destiny? Anything that ends in -ism? What does “master ourselves” even mean?

  • “The crops don’t fail as frequently as they used to, leaving us exposed to famine and starvation. But stock markets and national economies burn out and threaten us with social consequences that can be even more devastating.”

    This is also a correct statement, but you pin this threat on Enlightenment and progressive modernity? You didn’t even get your donkey’s tail on the correct wall. Don’t you think it would be best to start on Wall Street and in The City before you go blaming any ideology?

    Even if you want to abstract one level and talk about political institutions, New Democrats and New Labour would be a good place to start, not communist parties in 1960. And if you’re going to get to ideology eventually anyway, how about Randianism?

  • “For the last generation, we have been acting on the assumption that the great problems have been solved, the great questions answered, and that all that remains is the application of our correct general principles to particular cases. In other words, we have assumed that we are living in an Age of Technique.”

    Ah, your favorite and mine, the strawman argument. Just who is this “we”? Well, go ahead and knock it down anyway:

    “I think that is wrong. I think even the experts don’t have the solutions to many of our problems. The twenty-first century is a time of uncertainty, risk, revolution and explosion and unfortunately we are heading into it with some assumptions that look less and less likely.”

    So reasonable! So simply explained! Who could argue with that? Well, no one. I for one, particularly enjoyed this part: “the first century was a time of uncertainty, risk, revolution and explosion.” What’s that, WRM said “the 21st century is”? Oh, well, that’s true, too.

    What are some of these assumptions?

    “Yet it seems less and less likely that we will ever have the kind of economics of which we all dream: a set of ideas and formulae that when followed yield automatic and growing prosperity.”

    Of course, liberal elites dream of this, but do “we” all assume this to be possible? No. Even your more general and bland “social science can yield reliable techniques for political action” can only be applied to polling or strategic communication. Nobody is trying to base political action on economic formulas. Gotta love any sentence beginning “Human beings are …”.

  • “Looking at Europe, it’s clear that political elites can’t bridge the cultural divides between Greece and Germany. Given that, it is next to impossible to imagine how they will create a framework of global governance that suits Saudi Arabia, India, China, Russia, the United States and Brazil anytime soon.”

    Yup, that’s clear alright, although I would say the socio-economic divide is more important than the cultural (I’m still holding on to a little Marx). And as you’ve so ably demonstrated from Copenhagen – as well as the Doha trade talks have shown – political elites can’t pull many strings at the international level anymore. A New World Order will eventually emerge, but it will be a cobbled together network, like the streets of Baghdad, not DC.

  • This one certainly isn’t a news flash to anyone in academia: “Economic policy and more generally governance and social policy are going to remain arts and not sciences.”

    But this really is about as ho hum as can be: “There is no surefire strategy in peace that can prevent war; there is no surefire strategy in war that can lead to a guaranteed victory; there is no surefire strategy to make money in stocks.”

    Although it helps to not threaten anybody, have an overwhelming firepower advantage, and to be Goldman Sachs, respectively.

  • And finally (the cheers arise), “We like to assume that history is getting calmer, more settled, safer and more predictable.” Do I need to even say it?

    I’m stopping now because the real faith stuff that ends the post is too target rich. I got to move on.

  • Gennady_Mishin

    May be we need a Global civil religion, based on Enlightment’s – modern – principles, not “domes, steeples and minarets”. Only Global civil religion overcome postmodern “the crisis of humanity’s faith’. And Global civil religion will subdue global economic. Sure, that is the long heavy way.

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  • The economy of greed and private wealth maximization has to be replaced by a sufficiency economy for the common good with sustainable wealth optimization. As the malaise is spiritual at its root, the Buddhist, the Islamic and the Christian visions of a sufficiency economy need to be presented and discussed. I know that we have many experts in ethics, law, economics, politics, religion, culture, education and media in our Circle of Friends who can contribute to develop and concretize such a new, sustainable model of a global ethical economy. Business Ethics and Spritualty is still optional in most universities and should become mandatory.

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