A crisis in the meaning of economy

There are two types of crises that can be identified in the history of our society: one is the “dialectic” crisis, and the other is the “entropic” crisis.

A crisis in the meaning of economy

By Stefano Zamagni

from "Economy of Communion - a new culture" N.30 - December 2009

A dialectic crisis arises from a fundamental conflict that takes shape within a determined society and that contains, within itself, the seeds or the forces to overcome itself. Historical and well-known examples of dialectic crises include the American Revolution, the French Revolution and the Revolution of October in Russia, in 1917.

Instead, an entropic crisis is one that tends to make the system collapse, through implosion, without changing it.  This type of crisis developes whenever a society loses the sense (literally, the direction) of its own walk.

Why is such a distinction important?  Because the strategies for overcoming these two types of crisis are different. An entropic crisis is not overcome with technical adjustments, or only with legislative or regulatory provisions (which are necessary), but by facing the question of meaning straight on, by resolving it.

That is why prophetic minorities are indispensible. Through a supplement of thought, and above all through the testimony of works, this minority knows how to indicate the new direction towards which the society can move. That is what happened when Saint Benedict, launching his famous “work and pray”, inaugurated the new era of cathedrals.

And so, the great economic-financial crisis still underway is an entropic one. Therefore, it is incorrect to compare it to that of 1929 which was, mostly, of dialectic nature. That historical crisis was attributed to human error, especially by those authorities that controlled economic and financial transactions. Certainly, there were human errors in the current crisis, but these were the consequence not so much of cognitive deficit as much as the crisis of meaning which has invested western society in the wake of globalization.

A spontaneous question arises then: in what has this crisis of meaning expressed itself, and where has it shown itself? My answer is this: in a triple separation, and specifically, in the separation between the economic sphere and the social one, between work and the creation of wealth, and between market and democracy. I think I can clarify myself, even if briefly, starting with the first example.

One of the many inheritances (not positive) left by modern society is the conviction that an entrepreneur is not a proper one if he does not exclusively seek the maximization of profit. If otherwise, he must resign himself to be part of the social environment, where social businesses, social cooperatives, foundations of various types, etc., are at work.

This absurd conceptualization resulted in identifying economy as the place of wealth production, and instead thinking of the societal sphere as the place of redistribution, where solidarity and/or compassion (whether be public or private) are the fundamental standards. The consequences of such a separation have already been seen, and we´re still seeing them. In the last thirty years, we have seen scandalous growth in social inequality.  Pope Benedict XVI´s recent encyclical letter, Caritas in Veritate, skillfully indicates that the way out of the problem raised here is in recomposing that which was separated. The encyclical suggests that the experience of human society can be lived within normal economic life - and not only when one is already outside the economic realm, as the dicotomic model of social order would like.

Moving on to the second case of separation: for centuries, humanity has been fond of the idea that human work is at the origin of wealth creation – so much so that even Adam Smith opened his most important work, The Wealth of Nations (1776), precisely with this consideration. What is the novelty that the financialization of the economy, begun around thirty years ago, has ended up determining? It determines the idea that, according to such, speculative finance creates much more wealth - and much, much more quickly – than a job. The consequences of such a pseudo-cultural revolution are before everyone´s eyes.

Western civilization is based on a key idea, that of the “good life”, from which comes the right-responsibility of each person to project his or her own life towards civil happiness.  But where can one begin to reach such an objective if not from the intense work which is home of good existence?

Human flowering – that is, eudainomia as Aristotle meant it (true knowledge, true happiness) – is not to be searched for after work, as what happened in the yesterday, because the human being finds his humanity while working. Clearly, the welcoming of the eudemonic paradigm implicates that a business is not aligned with its goals only by reaching the maximum profit, even though it does not exclude this.  This means that it´s possible for businesses with a civil vocation to arise and develope – businesses that are capable of going beyond their own self-reference, widening the possibilities of people´s job choices.

Finally, the third kind of separation which I would like to talk to you about is this: economic theory has always retained that one of the market´s fundamental merits is that of spreading knowledge. In fact, through the mechanism of prices, every producer and consumer “involuntarily” contributes to the optimal distribution of resources.

This way of seeing things, which is very common among economists, still neglects a very relavante element: the fact that this mechanism only works if there is a common language, the “market language”. But what remains true is that in almost any society, many different languages coexist, the market language being only one of these. But this would be the reason that it is widely believed that the market is a morally neutral area which has no need of ethical principles to function efficiently.

The economical-financial crisis which is underway – a entropic crisis and not a dialectic one – is the best and most evident empirical falsification of such a proposition.

I would like to close by recalling the historical statement, still true today, of Blaise Pascal. The French philosopher wrote that there are three orders of things: the order of bodies, which corresponds to the spirit of geometry (l´esprit de geometrie, or “On the Geometrical Mind”); the order of hearts, which corresponds to the spirit of finesse (l´esprit de finesse): and the order of charity which corresponds to the spirit of prophecy. And what if that the poverty of prophetical voices – and consequently, of prophetic minorities – which we see going around, would depend on the weakening of the order of charity?

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