*** DEBUG END ***

The financial crisis is a chance to be fair

22 October 2008

The global economic meltdown could be turned into a biblical jubilee to help the poor, argues Ted Harrison

The writer of Leviticus was an early economist, if not the first ever. Leviticus 25, the jubilee chapter, contains a description of a primitive economic system. Even within the limited context of an uncomplicated agrarian society, it was acknow­ledged that regulation was required for the free market to operate fairly. Without control, it was feared that the clever, the hard-working, or the unscrupulous would always end up rich at the expense of the less able and the honest.

The Leviticus economist also foresaw the cyclical nature of eco­nomic activity, and advocated a pat­tern to forestall booms and slumps. Furthermore, the writer was also an early ecologist, who realised that unless land is allowed regular periods of rest to recover fertility, productivity diminishes steadily. This insight, combined with his ob­servations on the economic facts of life, came together in the jubilee.

In brief, every seven years the land was to be allowed to rest. “You shall not sow your field or prune your vineyard.” It was to be a sabbath year. After seven sabbaths — that is, every 50 years — the jubilee was to be declared. This was a time of econ­omic redistribution.

On the assumption that all land was God’s, no individual could claim indefinite ownership of a property. At the jubilee, economic activity started back at square one. Land could change hands in the inter­vening 50 years, but it was to be valued according to how many years were to run before the next re­distribution.

“When you sell or buy land among yourselves, neither party shall drive a hard bargain. You shall pay . . . according to the number of years since the jubilee . . . the more years there are to run, the higher the price.” This is much the same principle as that by which a leasehold property is valued today.

Unlike many later economists, who simply described and ob­served, the Old Testament writer was concerned with justice.

It is 50 years since the Prime Minister Harold Macmillan’s declaration that we had never had it so good heralded the modern era of steady growth. Over the past half-century, the economic cycle has produced periods of boom and slump roughly every seven years. Yet, despite these periodic bursts of growth and times of consolidation, people in the Western world have, by and large, become increas­ingly affluent.

The rich have become super-rich. The poor have been kept firmly out of sight: they toil in food factories, polytunnels, and mines in distant countries, or beaver away on a min­imum wage, out of sight, cleaning hospitals and offices.

The land has never been given a chance to rest. Increasingly, artificial fertilisers are poured into the soil to maintain high levels of output. Forests are cut down, and oceans are over-fished with little thought for the long-term consequences.

The wisdom of Leviticus was for­gotten. No one paused. No one rested. We now face our jubilee moment. Sadly, it is not a jubilee that has been planned and built into our cultural narrative, but a brutal cessation of the good life. Instead of recoiling with horror, we should seize the moment as an opportunity, and recall our obligation to justice.

There will be unemployment, bankruptcies, and the loss of savings. There will be much personal an­guish, which the current policies of printing money to prop up unsound banks might temporarily relieve. The rich will survive, if somewhat chastened: they always do. The poor will be overlooked.

As the economist and active An­glican Lord Griffiths of Fforestfach said earlier this year in a House of Lords debate: “The problem of debt affects people at all income levels, but . . . disproportionately affects low-income families, single-parent fam­ilies, and students.”

He said that whereas in the mid-1970s household debt was about 40 per cent of household income, “by last year, it was up to 180 per cent”. One survey estimated that roughly three million people, adults and children, found debt a serious prob­lem, and that up to 12 million struggled from time to time in mak­ing repayments, he said.

I would argue that the priority should not be to shore up the system, but to let the economic implosion take its course. If money is to be printed by governments, it should not be for bankers to spend. It should be targeted carefully to alleviate the suffering of the vul­nerable and those most unfairly penalised.

The resulting inflation (and print­ing money causes inflation) could be used creatively to wipe out the debts of the poorest. Four years ago, a paper by the US economists Matthias Doepke and Martin Schneider described the effect suc­cinctly. “An immediate consequence of an unanticipated change in the price level is redistribution: inflation lowers the real value of nominal assets and liabilities, and thereby redistributes wealth from lenders to borrowers.”

If this happened on a large scale, it could be a true jubilee redistribution of assets. It should not be used to cancel the debts of governments or institutions, but those of ordinary people who have had to borrow over the years to survive and provide housing for families.

The ecological consequences of our jubilee moment could be far-reaching, and largely beneficial. A reduction in consumption, for in­stance, means less demand for tropical hardwoods culled from endangered rainforests. Job losses created by a slowing down of eco­nomic activity could be offset by creating new jobs for a more responsible future.

It would be a modern version of the Keynesian answer to unemploy­ment during the inter-war recession. Numerous projects suggest them­selves, ranging from the production of a new generation of clean-energy motor vehicles to providing micro-power genera­tion systems for homes and communities.

  The writer of Leviticus knew nothing of the world of sub-prime mortgages and hedge funds, but he was a wise economist who had a strong sense of human nature. The jubilee he described was not a time of regret and economic anxiety, but one of opportunity — to be greeted with the celebratory blast of a ram’s horn and a proclamation of liberty.

Ted Harrison is an author and a former BBC Religious Affairs Correspondent.



Welcome to the Church Times

​To explore the Church Times website fully, please sign in or subscribe.

Non-subscribers can read four articles for free each month. (You will need to register.)