By Wayne Visser & Alastair McIntosh

Our third observation is that many people ask whether the “credit crunch” (the term sounds disarmingly like a packet of breakfast cereal, with a free gift inside) signals the “end of capitalism”. On the contrary, we consider that it represents only a cyclical spasm in the process by which capitalism periodically restructures itself in a crash that most hurts the weak. The consequence of job losses and repossessions in the housing market are that the relatively disadvantaged, many now saddled with negative equity, will be forced long term to work harder to pay off debts, including their share of the national debt that will manifest in tax rises. As such, the creditors – many from their offshore tax havens – retain and reconsolidate a grip that they would not have had if their involvement in the process had been through risk-shared equity holdings, as with Islamic banking principles. These investors will, in future, be the people who find themselves in a position to buy up repossessed (which is to say, bankrupt) housing stock, and thereby strengthen their arm in future as rentiers to those who have lost out. The relatively poor will be forced to work yet harder on a treadmill that damages family life and with it, weakens the future fabric of society.

Capitalism can be understood at many different levels, from honest trade and entrepreneurialism all the way to its advanced Anglo-American casino version. In the latter, the role of money undergoes a shift. It changes from its primary role as a means of recording and lubricating exchanges of goods and services. It takes on second order abstract qualities of being speculative. Here money alone generates more money, and the principle of usury – defining it as the lending of money at real positive rates of interest (i.e. rates greater than what is needed to cover inflation and risk) – is the inner wheel driving the system.

Although we believe capitalism in one form or another is here to stay, the ”credit crunch” may go down in history as the most serious challenge yet to financially speculative advanced capitalism. Henceforth electorates and their governments should give more determined consideration to the oligarchic principle of allowing so much power and latitude to shareholders and their financial analysts whose investment motivation is purely to ‘play the market’.

2009 will probably mark the point at which the pendulum starts to swing back to more carefully and strongly regulated financial markets. As it turns out, this approach is entirely consistent with the philosophy of the iconic economists Adam Smith (who was after all a ‘moral philosopher’) and John Maynard Keynes (who warned against the dangers of speculative activities). Ironically, these are often cited by neoliberal market fundamentalists in support of their ideological deregulatory stance. Any of us who have knowingly participated in usury-related casino economics share the responsibility for what has happened. Whilst neither of the current writers is a Moslem, we cannot help but be reminded of the Islamic hadith that states: “The taker of usury and the giver of it and the writer of its papers and the witness to it, are equal in crime.” To put it in the language of other Abrahamic religions, we have worshipped at the shrine of Mammon, the god of wealth. Mammon has now transmogrified into Moloch – the fire-filled hollow stone god of the Hebrew Bible. Into his lap the children were reputedly sacrificed … and that, in the name of idolatrously seeking future economic prosperity.

Through the lens of such metaphor the “credit crunch” must, like the “climate change crunch”, be understood spiritually, or in terms of deep values. It is our consumer greed that has driven the problems now faced. Whatever our religious background if any, the crises of present times can be seen as a spiritual, or a values-based wake-up call. As such, modernity may still have something to learn from the ancients.

Tags: alastair mcintosh, credit crunch, financial crisis, interest, usury, wayne visser