The philosophy of the credit crunch

Aristotle thought that humans are naturally designed to live together in communities. We are not loners by nature, he thought, but live most naturally cultures within communities which ought not to have more than 100,000 inhabitants. He lived at a time when Alexander the great was developing a massive empire with large cities, by conquest. The conquest made Alexander wealthy, but Aristotle thought that wealth is only a means to an end; the end is virtue. We cannot flourish, Aristotle thought, unless we are virtuous. These ideas developed over two thousand years ago, are still relevant today.

E E Schumacher told us that small is beautiful; very few believed him. We regard big as beautiful; the bigger the enterprise the more respect and esteem society holds it in and elected governments seek the views of these massive enterprises, listen to them and organise affairs along the lines that large business recommends. They never listen to the small people.

We have consciously formed massive cities, large nations, enormous enterprises that straddle many communities all over the world. We have made the pursuit of wealth an end in itself, and not the means to the end of virtue. We have equated growth with virtue, but growth is not virtue. We do not flourish.

We are battered by emotional and physical storms; wars, poverty and stress. Right now, the banking and economic crisis operates unfairly against the ordinary person.

That person may have worked all of his or her life for a prospect of spending a free years at the end of it in self sufficient retirement, being able to live comfortably on a hard earned pension. Another may have worked hard to provide a hand for children, expecting that the hand will still be open after that person has died to simply do no more than provide a better life for the children left behind. Others have worked for the common good, hoping by their efforts to help create a more virtuous society.

They have in each case created modest wealth of ordinary folk, not for the pursuit of wealth in itself by as a means to a small degree of virtue. They have stored the wealth in assets or investments over which they have no control. And when the time times, as it always will come, to comfortably enjoy the pension, or for the children to enjoy a better life, or for society to draw down the efforts, they find that those simply entrusted to manage the pension, the modest wealth or the fruits of their labour have taken it, spent it on selfish pleasures and now ask them through their taxes for more labour to produce that to which they are already entitled.

The savings, the value of the home and the benefits of the years of hard work, if invested in small communities could be easily understood. Small numbers are comprehensible, such as the value of your home and the value of your pension each month. But amalgamate millions of these small numbers together and you have numbers that you cannot understand; the hundreds of billions that you now pay to recapitalise banks so that they may repay you some of the money that you saved with them.

Aristotle and Schumacher would not be surprised at the credit crunch if they were alive today.

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