Economics: Religion Masquerading as Science

Economics: The Clandestine Religion Masquerading as a Science is an excellent piece by the founder of the American Monetary Institute, Stephen Zarlenga.

[There's a] growing awareness that we are all being targeted in economic warfare – all of us – your children and parents, friends, neighbors; since we can’t escape this struggle we’d better understand, and learn how to fight and win it!

This war is real and becomes more obvious in different ways every day. I am not referring to Iraq but to the deeper struggle over the direction of mankind that is more religious in nature. Not the fights with the religious right wing now threatening America’s political process. Those are real problems, but now we focus on a more fundamental battle with the new clandestine religion known as “economics”!

A year ago, Zbignieuw Brezinski, Carter’s National Security Advisor said the attempt to establish a new world order was doomed to failure because there was no universal religious underpinning to it as existed in the old world order – the Roman Empire, with its emperor worship and later its Christianity.

Brezinski was probably right that it would fail, but overlooked that this new order does have a universal religious belief system called Economics. It has its own god, the Market; its own priesthood of Economists; its temples, Banks until recently, clothed in ancient temple architecture.

An example of the religious nature of economics is the promotion of market as god. We are warned:

Don’t try to legislate on the market; it is stronger than our puny laws. It is omnipotent

Don’t try to regulate outcomes, the market with input from all of its participants always knows better. It is omniscient

Do the right things and the market will reward you, the wrong things and you’ll be punished. It is beneficent

Omnipotence, omniscience and beneficence are the attributes of a god, not a mere device for buying, selling and exchanging. - A strange deity that abhors morality and where even the most atheistic libertarians have been suckered into believing in the market’s “invisible hands,” like multiple Holy Ghosts.

Economics used to be based in morality. From 1100 to 1500, philosophy, religion and economics were combined in one group – the Scholastics - church philosophers including Albert the Great and Thomas Aquinas who defined morality in commercial dealings. They focused on “the just price” and on usury. Usury was not merely taking interest. It was always permitted to take interest in certain ways such as the Societas, and Census. The main condition was that there be real enterprise risk to the lender. They were really investors (see Lost Science of Money, Ch.7).

The scholastics distinguished between earning interest and the detested usury: usury being a misuse of the money system, similar to the Islamic concept of riba.

Their mentor from across the centuries was Aristotle not the bible and they drew conclusions based on his authority and on their observations; but mostly on logic and deduction, which is appropriate for moral questions.

Aristotle was the bulwark against usury writing: “The most hated sort [of wealth getting], and with the greatest reason, is usury, which makes a gain out of money itself and not from the natural object of it. For money was intended to be used in exchange but not to increase at interest.” (1258b, politics)

Those promoting usury found it necessary to attack Aristotle. Francis Bacon attacked: “Aristotle so confident and dogmatical…barren of the production of works for the benefit of the life of man.” (works, p.850)

Jeremy Bentham’s 1787 defense of usury attacked: “... ‘to trace an error to its fountain head is to refute it’…. if our ancestors have been all along under a mistake... How came the dominion of authority over our minds?”

One would think he is going to cite the strong Old Testament admonitions against usury. But he ignores the biblical prohibitions completely; he is after Aristotle: “Aristotle: that celebrated heathen…had never been able to discover in any one piece of money any organs for generating any other such piece. Emboldened by so strong a body of negative proof he ventured… an universal proposition, that all money is in nature barren...”

Bentham foisted the present misdefinition of usury on us, as taking more interest than normal. He promoted the idea of Utilitarianism which I summarize as forget morality – utility is what counts!

Modern economists kept the scholastics’ theoretical method using deductive logic but they ditched morality in favor of Bentham’s Utilitarianism. Despite the fact that the theoretical method works better on moral questions. Despite the fact that morality – or fairness - is a most useful element in any good society. Today economics primary effect is to justify forms of usury and empower those misusing the world’s money systems.

This continues despite the fact that over a century ago the great reformer Henry George destroyed utilitarianism in one sentence, writing: “[economics]…a science which…seems but to justify injustice, to canonize selfishness by throwing around it the halo of utility…” (Study of political economy lecture p. 6)

George noted the purposeful corruption of economics by: “…a powerful class whose incomes could not fail to be endangered by a recognition…that what makes them…wealthy is…only robbery, must from the beginning…have beset (political economy’s) primary step…” (SPE 140; also see 134, and 138)

Yet everywhere we look today, we see our world has come to be ruled by this new clandestine religion often referred to as Monetarism. How did it happen? Through control of the money system, society’s greatest dispenser of justice or injustice….

Power-hungry elements from ancient times to the present have dominated through the money power. Their main weapon has been the manipulation of language and thought, where definitions serve as heavy artillery….

By misdefining the nature of money, corrupt interests seized control of the money power, dominating society and deforming mankind in the process (see Lost Science of Money)

Economics has never properly defined money. They are still arguing whether money is a concrete power in commodities like gold and silver, or an interest bearing credit issued by private banks, or as we conclude from historical cases, money is an abstract social power - an institution of the law, having value because government receives it in taxes.

Economists use poor methodology – an over reliance on theoretical reasoning. We have two basic methods of gaining knowledge – through reason and through experience. Alexander Del Mar the great monetary historian noted:

"As a rule economists...don’t take the trouble to study the history of money; it is much easier to imagine it and to deduce the principles of this imaginary knowledge."

This failure becomes staggering when combined with their reluctance to accurately define the terms of their theories. This is not new – in 1827 Malthus wrote a book to complain about poor definitions in political economy, noting: “it is quite astonishing that political economists of reputation should be inclined to resort to any kind of illustration however clumsy and inapplicable, rather than refer to money.” But when Malthus presented 60 “better” definitions; a definition of money is glaringly absent.

Fortunately, Aristotle outlined a science of money in 330BC still valid today: “all goods must therefore be measured by some one thing...now this unit is in truth, demand, which holds all things together...but money has become by convention a sort of representative of demand; and this is why it has the name nomisma - because it exists not by nature, but by law or binding custom [which in Greek is nomos].”

Thus Aristotle identified money as an abstract legal power - a social invention. Its essence is not tangible wealth, but a power to obtain wealth – a crucial distinction. Plato agreed and advocated such fiat money for his Republic. We find these key principles used in both Greek and Roman systems….

Right from Aristotle’s time, we find evidence of the great battle over the control of money. This private vs. public struggle over the monetary power remains the main political divide to this day.

We summarize it as Adam Smith vs. Aristotle. Smith helped erect a mythology of money obscuring the science of money, by attacking the legal concept of money in his definition:

“By the money price of goods it is to be observed, I understand always, the quantity of pure gold or silver for which they are sold, without any regard to denomination of the coin.”

Smith’s primitive misdefinition of money as a commodity insinuated a mythology of money into economics in 1776, from which it has not recovered. He did this despite the earlier work of Berkeley, Locke and Franklin, from 1729 to 1735, in his library which more accurately identified money’s abstract nature….

Bad as Smith was monetarily, there is now an even worse effort to completely remove the concept of money from our language and replace it with a concept of credit. Then, monetary reform will actually become “unthinkable” because we won’t have the monetary concepts necessary to frame our reform thoughts. That’s the opponent’s game plan, but the AMI won’t allow it – with your help we are reviving the concept of money!