A reasonable standard of consumption is a prerequisite of an economic system with long term productive stability. Many people now recognize this truth, and calls for voluntary simplicity and the end of consumer society meet a positive response from many people. However, the social systems implications of a reasonable standard of consumption have not been clearly thought through, partly because social systems thinking is a difficult discipline, and partly because a strong bias in favor of certain cultural norms strongly discourages any thinking which would challenge those norms. I call this bias the Social Will. The ability of the Social Will to produce conformity of thought on key social institutions is quite powerful.
The french historian Jean Michelet in writing about the Maillotin tax rebellion (named after the mallets or Maillots that were carried by the leaders of the rebellion) under the reign of the mad king Charles VI in late fourteenth century France explains how the leaders of the rebellion demanded audiences with the Dauphin (the future Charles VII) and lectured him about how a good king should treat his faithful subjects. Michelet explains that it never crossed the minds of the rebels that they could do without kings altogether, because the religion of royalty was still in full flower. If anyone had suggested to the Maillotins the elimination of royalty, they would have rejected this advice as the ravings of a radical mad person who wanted to destroy the natural social order and bring chaos and anarchy down upon the world. The Social Will of the France of that time had ordained a hereditary monarch as an essential element of good social organization. The suffering bourgeoisie wanted a good king who would rule wisely, but the idea of replacing monarchy by some other form of government was not within the event horizon of fourteenth century France.
Similarly many people are dissatisfied with the performance of private credit markets in wake the great recession of the last decade, but the percentage of these people who recognize that fundamental structural problems exist in this system which require new forms of credit is still quite small. The Social Will of modern global society has declared private credit markets to be an eternal and perfect form. John Mavrogordato summarized this resistance to new thinking on economic organization in the following terms in his 1917 book The World in Chains: Some Aspects of War and Trade:
“The distribution and exchange of commodities are necessary to the existence of the State; so necessary that it might be supposed that their regulation would be one of the primary functions of government. Proper systems of distribution and exchange correspond to the digestive processes of the body, on which depend the proper nutrition of all the parts and the real prosperity of the State as a whole; yet any comprehensive plan for their control is still regarded as the most unattainable dream of Utopia, and they are left to carry on as best they can in the interstices of private acquisitiveness.”
Unless we are planning to go all the way back to neolithic villages as the fundamental social unit credit cannot be dispensed with. Any time someone proposes to spend a large amount of resources in the present in order to produce economic value over long period of time in the future (e.g. building a bridge, a university, a semiconductor manufacturing plant, a solar PV farm, a nuclear power plant etc.) someone must evaluate the likelihood that this present expenditure of resources will produce in the future a sufficiently large flow of goods and services and a small enough amount of negative externalities to justify the expense. This evaluation of the future consequences of spending on infrastructure development is the process of granting credit.
To me it seems clear that leaving this process primarily in the hands of private credit markets whose raison d’etre is to turn money into more money is inconsistent with ecologically sound economic development. The people making decisions about credit should be public servants whose purpose is to create and maintain useful infrastructure rather than to turn money into more money. These community financiers should be paid salaries for services rendered rather than making money in proportion to the amount of debt they create. This not to say that community financiers should not be concerned with monetary flows and the economic viability of the enterprises to which they grant credit. Quite the contrary. But a significant difference exists between trying to create and maintain valuable infrastructure and trying to create as much debt as you can because your personal wealth is proportional to the size of this debt.
Of course if ‘public servant’ and ‘Marxist vampire’ are inescapable identities in this context then no useful reform of the credit system can be made, and we should quit wasting our time yakking about ways to save a form of social organization which is an evolutionary dead end.