By affecting work (that is, work and how its rewards can be shared) monetary policy affects the balance of relations arising from the “mutuality of shared being” in the web of communal bonding. This directly makes monetary policy a power or instrument for justice or injustice. “Justice presses the question of concern for the whole network of relations and persons.”5 This notion of justice rejects the impersonal view of justice which limits it to rules and principles in balancing of competing interests in a detached perspective of human relations. It adopts the biblical view of justice as right relations and “the practical unfolding of concern in our relationships and activities.”6
Monetary policy always embeds within it a vision of the moral order and a framework of moral discourse. The goal of the ethical analysis of monetary policy is to identify and expose both the philosophical foundation of that moral order and the thread that holds the framework together.
The making and implementation of monetary policy is an element of group conflict or class struggle. The struggle is not going on visibly as confrontation between bourgeoisie and proletariat, bankers and peasants, “cross of gold” and silver pitchfork, or rich and poor. It is manifesting itself especially in moral terms. The particular moral code that informs and undergirds monetary policy effectively shows on whose side monetary policymakers stand. For instance, many may have failed to notice that the significant preference of the Federal Reserve Board of the United States to fight inflation in place of unemployment has the net effect in the long run of benefiting persons and institutions whose value of financials assets is inversely related to the level of inflation. Falling levels of inflation favor lenders and holders of bonds.7 No central banker or apologist of inflation-targeting central bank would present the matter in this obviously “crude and tactless” way as I have done. He or she would couch the argument in the language of democracy, sound money, rights, and battle against inflation. As Martin Wolf, an editor of the Financial Times of London, puts it: “The inflation tax is the most covert and obscure form of taxation. It is a breech of trust. It is inconsistent with the fundamental democratic principle that taxes should be voted in parliament.”8
The monetary-policy struggle is both mooted and accented by “ceremonies of innocence” and the “rituals of struggle.” Richard Madsen defines ceremonies of innocence as rituals that integrate a wide range of different points of view.9 Ceremonies of innocence is able to unite people of diverse points of view because there is a wide range of possible interpretations that people attach to the acts or dramas performed in a ritual and thus not immediately see diversity in political, social, or economic interest. In America we are used to seeing the Federal Reserve Board make quarterly (periodic) announcements about fundamental interest rate changes; its chairman giving reports on the state of the economy to Congress every six months, and once in a while stepping out of his high temple to make public speeches like warning against “irrational exuberance.” In these acts and speeches, most Americans see a non-politician, “neutral” technocrat making decisions about the directions of the economy and view themselves as different from the other countries where matters of money supply are politicized. The Fed’s rituals is an expression of a “sharply focused sacred” free market doctrine and Americans see themselves or their representatives united on the basis of a common theme of less government. It is not obvious to them that the Fed’s monetary policies are calling them to take a well-defined moral responsibility. They interpret the Fed’s policies in flexible ways and react to them in ways that suit their economic and political strategies.
The biannual collective ritual of the Fed’s chairman before Congress only blurs the “boundaries of their different beliefs and hopes.” If this “ceremony of innocence” is not wrong, it is at best only a half-truth. Many economists have shown that the ritual of monetary policies in America is not a ritual of ceremony of innocence but a real ritual of struggles. Monetary policies “celebrate one narrow set of ideas and turn those who hold them against everyone who does not,”10 dividing Americans into sharply composed camps, those who benefit from the inflation fighting focus of the Federal Reserve Board and those who suffer in the unemployment hangover. There are differential impacts of monetary policies on classes, races, and regions. There are the bankers who share with the government the power of money creation and hence huge profits, and those who do not. Monetary policies pit the present generation (or consumption) against the future generation (investment), the environment against capitalist production. For these economists the moral center does not hold and words of William Butler Yeats rings loud for America: “The ceremony of innocence is drowned;/The best lacks all conviction, while the worst/Are filled with passionate intensity.”11
This notwithstanding, America, like many advanced capitalist nations attaches a sacred aura to its central bank, making it stand for the deepest shared symbol of highest hopes and aspirations of its economy.12 The members of the Federal Reserve Board constitute a technocratic body with individual terms running as much as fourteen years; none is subject to the election cycle and takes no order from anybody.13 It is perched at the top of the “food chain.” It is charged with the sacred duty of protecting the dream of an expanding economy that serves all people as a whole and draws them into a unified intercourse as one big family. The central bank is suspended in a web of significance and meaning which economists, bankers, and politicians have spun. This web constitutes a set of moral discourse with a solid conscious consensus about what is the proper and morally right way to conduct public economic policies.
When even monetary-policymakers and bankers alike are not overtly conscious of their ethics, their decisions and predictions are premised on values and norms that shape their decisions. At the minimum, they harbor views on the determinants of economic outcomes. Contextually, and in general, Americans tend to explain economic outcomes with more emphasis on individual efforts than on luck (partly because of perceived opportunities for social mobility). Alberto Alesina et al have shown that this is not the situation in Europe where the emphasis tends to be put on luck.14 This difference in attitude has definite ethical implications. Americans, unlike Europeans who favor some protection schemes and income redistribution, are willing to tolerate more income inequality and prefer focusing their gaze on equality of opportunity.
Exercises
1. Define and explain the seven elements of business.
2. Describe the importance of accounting to ministerial leadership in the twenty-first century.
3. Using the model of relationship-product for corporation, explain how your church can increase its membership.
4. What do you understand by monetary policy and what are some of the “ceremonies of innocence” deployed to increase public buy-in of actions of the Federal Reserve Board of the United States?
1 For a discussion of the effective management practices of the church, see Wimberly, Business of the Church.