Is credit a phenomenon of the individual or of society, or both? And does credit have as stifling or flourishing effect on human capabilities? One asks because social innovations today need
to do two things in addition to their immediate task and objectives. One is to comport with modern finance; the other is to make that finance ‘other-friendly’, not just predicated on self-interest.
An example of this concerns the provision of credit to young people in ways that enable them to undertake projects based on their inherent or cultivated creativity, skills and initiative. As outlined previously in this column, this
in turn puts a premium on teaching young people financial literacy (in essence meaning the ability to maintain accounts and work to a budget in the context of a financial plan of appropriate timescale to their project), so that they can be granted credit on
terms and at rates of interest that they, not the lenders, determine out of the circumstances and profitability of their project.
This is especially true of young people without access
to credit when they begin their own journey in life. What one might call the credit-marginalised. On the face of it this may seem a narrow and over-specific focus, but many aspects of marginalisation – inter alia poverty, long-term unemployment,
low self-esteem – are the consequence of not having access to credit, let alone open access.
Moreover, such problems are typically addressed from the income ‘end’
of finance rather than in terms of capitalisation. Income is important, of course, but it presupposes that the person or activity receiving the income is adequately and properly capitalised, and therefore does not touch or address the way that that
capitalisation takes place – that is to say, the way the resources (stock, equipment, liquidity, etc.) on which it depends are financed.
The further importance of a kind of credit that is capital-focussed rather than income-focussed, is that it is also not predicated on young people getting or having a job directly. Instead, it almost obliges them to find
their way in life by identifying and unfolding their capacities (whether those capacities are innate or developed through education), and then being advanced credit in order to give these capacities concrete, but also societal, expression.
For both provider and recipient of credit, a whole new world thus opens up, leading beyond homo economicus, that restless, insatiable being who, is always computing his personal gain. And out
from the narrow horizons of mondo economicus, where we are expected to remain asleep and to defer to unseen market forces (despite the neo-deism this implies), and to unconscious behaviour driven by instinct – witness such telling expressions
as ‘animal spirits’, ‘survival of the fittest’, and ‘bull’ and ‘bear’ markets, and so on.(1)
Moving from animal-like behaviour and values
to conscious behaviour is not automatic, however; it presupposes moral exercise. To wax Aristotelian, it is not enough to condition conduct by ethics. Ethics have in turn to be conditioned by virtues and virtues by character. Where, though, is the wellspring
of this new behaviour?
In her critique of positivist economics, Valeria Mosini (2) points out that economists of the stature of Lionel Robbins and Leon Walras indicate that human
will means economics cannot be a natural science. She reiterates Auguste Comte’s claim that love, arguably an attribute of will, can lead egoism over into altruism. While her own view is that “will, combined with hope, can provide a powerful propeller
potentially capable of unravelling [the neo-liberal] paradigm…” – a sentiment that reflects her view that economics without ethics is not socially viable.
not, therefore, that a case cannot be made for moving beyond self-interest as the sole driver of economic behaviour. The question is: What is needed for people to wake up in their will and therefore to change their behaviour, their motivation? And
to do so as quickly, effectively and generally – even urgently – as today’s circumstances demand? Put another way, how can we ‘fast track’ ourselves to conditions that require and thereby bring about liberty, equality and fraternity,
freedom, solidarity and equality – at least in the individual’s immediate micro social environment, as it were, if not yet society-wide?
It is in this sense that one can
look upon capital or credit as enabling. This is not to say anything new. Capital has always been emancipatory, but this emancipation has tended to have a particular twin context. Firstly, it has been confined to a relatively narrow group of capital owners.
Secondly, it has been used in link with material production, material progress. In the last 200 years both these conditions have been modified considerably.
As to the first, for better
or worse, the ownership of capital has become greatly widened, although this cannot be said of our understanding of capital. As to the second, with the increase in living standards consequent on the increase in productivity, our material needs have shrunk
relative to our non-material needs. We have moved up Maslow’s pyramid to its higher categories: creativity, morality, and self-actualisation.
Now, to echo the English economist,
John Maynard Keynes writing in 1930, it is time to speak of “the real values of life,” namely, “to live wisely and agreeably and well.” For Keynes, for example, the economic problem is to provide people with the goods required for their
material needs so that they can accomplish what Aristotle called ‘fine actions’.(3) In short, with their livelihood taken care of, human beings can become creative, in our case beginning with young people. But for this they need credit every bit
as much as they need food in their mouths and a roof over their heads
(1) For this paragraph and the reference to Keynes at the end, I am n debt ot my colleague, Ro Naastepad in Holland.
(2) Valerie Mosini. Reassessing the Paradigm of Economics. Bringing Positive Economics Back into the Normative Framework, Abingdon: Routledge, 2011.
(3) For Keynes’s link to Aristotle, see Skidelsky, R. (2010) Keynes. The Return of the Master, London: Penguin Books, and Skidelsky, R. and Skidelsky, E. (2012) How Much Is Enough? The Love of Money and
the Case for the Good Life, London: Allen Lane.