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It is becoming clear that many Western countries are plunging into economic recession. Instead of lamenting the situation, we should ask: What can we learn from this? What does the experience of the past 20 years teach us?

The title of the lesson might be, "The dangers of reckless spending."

It is true that the current crisis was ushered in by events in financial markets. But root causes go deeper, and they touch practically all of us: our ways of living and attitudes towards life – towards acting, owning, and being.

There are two fundamental issues. One concerns ideas, the other ethics. John Maynard Keynes once wrote:

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. 

Paradoxically, Keynes' ideas were among the most influential of the twentieth century. And he deserves much of the blame for the economic problems of today. One of the ideas central to his macroeconomic theory is the "paradox of thrift," which implies that savings are an economic evil. Following the ideas of Keynes, it is now commonly believed that our economies are driven by spending, and that a reduction in spending would cause a halt in economic growth.

As is the case with most popular ideas, there is a grain of truth in Keynes. In the very short run, a reduction in spending will cause difficulties. As consumers cut back their purchases, businesses are left between a rock and a hard place. However, the problem is not lack of spending as such, but the fact that earlier rates of overspending encouraged businesses to invest in equipment and inventories that are now turning out to be unprofitable. What creates costs and human suffering is the slow process of liquidating projects and laying off employees.

But in the longer run, unsustainable rates of spending will always prove destructive. We do not live in a dream world. That takes us to the other problem: the ethics of consumerism.

Consumerism is not about economics alone, for it is also destructive to man's spiritual soul. The spirit and the material world are linked. As we are by nature embodied souls, material incentives matter.

Among the external causes of consumerism, advertising is a major issue. People often say that advertising does not affect their behavior, but strangely enough, it seems to affect that of many others. Advertising is not inherently evil – it serves the useful purpose of disseminating information – but there is a dangerous tendency. By appealing to man's sensitive instincts, excessive and abusive advertising distorts rational behavior patterns and makes man more vulnerable to the slavery of his passions.

Another external factor is monetary policy. As central banks generate artificially low interest rates, they encourage living on debt and discourage saving. Over longer periods of time, this may have a deep-seated effect on personal and social attitudes. The virtuous habit of "saving for the rainy day" is increasingly rare.

Man remains a free being, and therefore the internal factors count the most. This is why personal virtues and ethics exist. As Viktor Frankl explained in his classic Man in Search of Meaning, we never lose the power of choice even in the midst of the greatest external difficulties. Choosing freely can be difficult, but failing to choose is itself a result of a choice, as we willingly succumb to external influences.

To use our freedom responsibly, we need virtues, which are stable habits of the intellect and the will to do the good. Virtues are not innate to man; they grow through practice, day in and day out. A good education and moral formation, beginning in the family, are also important. As we mature and reach adulthood, we must gradually assume responsibility for our personal development.

Marx taught that history is determined by material forces. They are not irrelevant, but he was wrong, nevertheless. The human spirit is the driving force of history. It is the spirit that determines our use of material goods and the way we shape the incentives and institutions around us.

As to the problem of the long run, Keynes famously mused: "In the long run, we're all dead." Well, we are living the long run right here, right now. Let us use it wisely.


Dr. Oskari Juurikkala is the recipient of the 2014 Novak Award.  A native of Helsinki, Finland, he is currently pursuing post-graduate studies in theology at the Pontifical University of the Holy Cross in Rome. Educated in both law (London School of Economics) and economics (Helsinki School of Economics), Dr. Juurikkala earned a joint Ph.D. in law and economics from the University of Eastern Finland in 2012. His doctoral research concentrated on the impact of government regulation on financial markets.

Prior to coming to Rome for further studies, he advised the Finns Party on European Union economic policy, served as consultant to Providentia, whose mission is dedicated to virtuous leadership training for business professionals, and as legal counsel to the Finnish minerals exploration firm Magnus Minerals.

In academia Dr. Juurikkala has taught various courses, including Economics and Politics of European Integration (University of Helsinki), Law and Economics (University of Helsinki), Intermediate Microeconomics (Hanken School of Economics), and Business Ethics (Helsinki School of Economics).

He has served as a researcher on financial market regulation and behavioral economics at the University of Helsinki’s Institute of International Economic Law, as well as fellow at the Institute of Economic Affairs in London and at the Acton Institute for the Study of Religion and Liberty in Grand Rapids, Michigan.

Dr. Juurikkala has published on a wide range of topics, including law and social norms, regulation of financial derivatives, venture capital, philosophy of economics, and legal philosophy. He is author of Pensions, Population, and Prosperity (Acton Institute, 2007) and is co-editor of Pension Provision: Government Failure Around the World (Institute of Economic Affairs, 2008).

Among his noteworthy academic articles, he has written: The Behavioral Paradox: Why Investor Irrationality Calls for Lighter and Simpler Financial Regulation (Fordham Journal of Corporate and Financial Law, 2012); Likeness to the Divinity? Virtues and Charismatic Leadership (Electronic Journal of Business Ethics and Organization Studies, 2012); Economics, Psychology and Happiness: Virtue Theory vs. Slavery of the Passions (Romanian Economic and Business Review, 2008); and Savings in the Absence of Functioning Property Rights (Economic Affairs, 2007).

Dr. Juurikkala has also presented papers and guided debate at a number of prestigious international conferences, including The Paradox of Freedom: Building Character in the 21st Century (Thomas More Institute’s “Dangerous School for Boys” symposium – London, 2010); Behavioral Economics and Financial Regulation: Challenging the Conventional Wisdom (Institute of Economic Affairs seminar – London, 2011); Pension Reform: Humanity and Community in Old Age Security (Acton Institute conference “Ethics, Aging, and the Coming Healthcare Challenge” – Rome, 2010); and Charismatic Leadership: A Virtue-based Approach (European Business Ethics Network Research conference – Tampere, Finland, 2010).