And so it was last night – an interesting range of panelists, no pollies, and a discussion about faith and ethics.

It was refreshing to listen to a focused discussion between people of faith and those with no religion (and the excellent point Eva Cox made about non-religious people having faith was one of the many sharp insights she and Susan Carland brought to the table). Cox’s disavowal of the Angry Atheists, and the general tone of the chat, showed that it’s possible to discuss religion, faith and ethics outside a frame characterised by biffo from fundamentalists on both sides of the equation.

One of the topics canvassed was the “brainwashing” of kids in schools. Virginia Trioli might have done better to clarify the difference between the role of chaplains (a program I oppose in the state system) and that of religious education, but, again, it was refreshing to see religious and non-religious interlocutors agree that classes which cover comparative religion and ethics teaching as an alternative to religious instruction are *a good thing*.

That’s an option that exists in New South Wales, for now. Coincidentally, Fred Nile today is threatening to torpedo Barry O’Farrell’s public sector wages squeeze if ethics classes aren’t abolished. I can’t even begin to list the ironies. But I’ll try.

If, for once, Qanda showed something of the free wheeling and rational debate that approaches the norm of Enlightenment discourse, and since that was once tied closely to the notion of open debate in Parliament, this sort of unethical horse trading shows the tendencies working against it at their starkest.

That it leads Fred Nile to (de facto) support for wage justice is only one of the strange results of fundamentalist passions overwhelming rationality.

So I was happy to find this point rather elegantly made by the Canadian academic Leo Panitch:

First, let’s be clear about capitalism – and with it the character of the state under capitalism. There is a conventional assumption, a leftover of the cold war perhaps, that somehow capitalism is essentially about the market and socialism is essentially about the state. In fact, a central historical feature of the state in capitalist societies is the role it plays as guarantor of private property and, most importantly for the smooth running of the financial markets, that it will always honour its bonds – that is, its borrowing from the private banks.

Because of this guarantee – the promise to pay others back from taxation revenue in the future – government bonds, whether issued to finance war or to finance welfare, constitute the least risky form of lending. As such, it forms the foundation of financial markets’ role in sustaining the ability of capitalists generally to accumulate – to continue to invest and make profits. This centrality of the state for capitalist accumulation is most notable with respect to those dominant states, like the USA, whose bonds are the foundation on which all calculations of value in global capitalism are based; states that host and support the main centres of international financial markets, such as New York and the City of London.

Understanding the role of the state in a capitalist society helps us to see why, when a government bails them out with public money, the bankers do not see this as the start of socialism. On the contrary, they see it as the government fulfilling its duty to the financial markets – whose smooth running it both depends on and sustains, by providing the basis of confidence in the credibility of the banking system.

So it is misleading to see government involvement in the banks – whether it be the pure bailout of the original Paulson program in the US, or the subsequent non-controlling equities taken by the US, British and other governments – as per se a move away even from neoliberalism. (It is also misleading to see neoliberalism as being about the withdrawal of the state from the markets – and therefore this current involvement of the state as a defeat of neoliberalism. The state under neoliberalism has been very active in promoting the vast expansion of financial markets and facilitating their volatile growth; and, as this volatility inevitably led to repeated financial crises, in keeping the financial system going from moments of chaos to moments of chaos.)

Yes, the road ahead looks difficult. But this is no time to abandon our faith in the capacity for enterprises and markets free of oppressive state intervention to reinvent ourselves and bounce back. Human ingenuity will prevail, confidence will eventually return and the wheels of commerce will spin again. There is too much evidence that the world, despite periodic setbacks, continues to progress.

He parses this intriguing paragraph thus:

Interesting isn’t it. The defence of free market capitalism depends on faith not on reason. Reason cannot do the job any more given the global financial crisis and its aftershocks on the economy. So faith is called in to plug the gaps.

Of course, faith was always a big component of economic liberalism. Enlightenment doctrines (and Marxism is another), having toppled God from his epistemological throne as the prime cause, took on some of the characteristics of the theism they thought they’d banished. So economic science has always been contaminated by ideology. Normative values such as “progress” and “ingenuity” underpin a worldview which partakes in blindness as well as insight. Now that a leap of faith is required to defend one’s choice of belief, we’re beginning to see this aspect of economic liberalism in plain view. We’re being asked to sign up to a metaphysics.

Coincidentally, John Quiggin has posted the inaugural number in a promised series of observations about economic doctrines which have been discredited by the Global Financial Crisis. First cab off the rank – the efficient markets hypothesis. His conclusion?

Once the EMH is abandoned, it seems likely that markets will do better than governments in planning investments in some cases (those where a good judgement of consumer demand is important, for example) and worse in others (those requiring long-term planning, for example). The logical implication is that a mixed economy will outperform both central planning and laissez faire, as was indeed the experience of the 20th century.

If we follow Quiggin in his reasoning, we’re effectively aligning ourselves with the sceptical and reflexive reasoning which is another legacy of the Enlightenment. It’s not as much fun as blind declarations of faith in the face of contrary evidence, and sorting folks into friends and enemies, the saved and the damned, but it’s a much better basis for managing an economy which needs to fulfil multiple objectives – including those of social justice.

Update: The second in Quiggin’s series – refuting the case for privatisation.

Update: This post now has a sequel.