A CHRISTIAN VIEW OF THE MARKET ECONOMY, GOVERNMENT AND SOCIAL JUSTICE
THE FINANCIAL CRISIS OF 2007 ONWARDS WAS NOT THE FIRST SUCH CRISIS, OR EVEN THE FIRST TIME A BANK HAS COLLAPSED. THE RESULTING RECESSION AND CRISIS HOWEVER WAS DEEP, NOT LEAST BECAUSE SOME COMBINATION OF GREED, ABUSE OF POWER AND TRUST, AS WELL AS THE DEVELOPMENT OF INCREASINGLY COMPLEX FINANCIAL INSTRUMENTS, ALL CONTRIBUTED TO THE COLLAPSE.
The outcome was not just a financial crisis, but a crisis for capitalism itself. How then might we respond as Christians? What can we say about the market economy and what about the role of government and the quest for social justice? Capitalism may indeed be facing a moral crisis, but we should not delude ourselves into thinking that alternatives whether built around the model of ‘control and command’ of either socialism or economies with large and active public ownership (think back to the inefficient state-controlled industries in the 1960s and 1970s) have fared any better.
To explore some of these questions, Brian Griffiths, a prominent Christian figure in the City of London, and I established last year the Centre for Enterprise, Markets and Ethics. We believed that that was a case to be made for the market economy, but that the ca se needed to be firmly based in Christian morality, responsibility and justice. Without these limits, the market would simply become a jungle.
So, Irving Kristol:
Capitalism survives because it still satisfies the basic, simple impulses of ordinary men and women. It will not continue to satisfy them however, without the bedrock provided by the Judeo-Christian tradition….It gives certain answers to ultimate questions that modern philosophy or modern thought of any kind cannot provide.[1]
Michael Novak, wrote in his 1991 book, The Spirit of Democratic Capitalism:
Of all the systems of political economy which have shaped our history, none has so revolutionized ordinary expectations of human life – lengthened the life span, made the elimination of poverty and famine thinkable, enlarged the range of human choice – as democratic capitalism.[2]
He goes on to define democratic capitalism as one essential defined by a market economy and a free society. It is difficult to contest that without the market economy we would have made significantly less progress in the fight against poverty and we would be living in societies that were substantially less free. However, there is a problem. Perhaps the problems could be summarised as follows:
- The problem of greed (eg monopoly)
- The morality of profit (eg exploitation)
- Accumulation of wealth and increased inequality Economic growth or sustainability.
In the USA, the Public Religion Research Institute conducted the 2013 Economic Values Survey, with the following findings:
Reasons cited as to why capitalism is working:
Encourages Personal Responsibility 33%
Provides Equal Opportunities 29%
Promotes Individual Freedom 24%
Creates Wealth 11%
Other 3%
Reasons cited as to why capitalism is not working:
Encourages Greed 34%
Does not provide Equal Opportunities 28%
Creates Poverty 14%
Creates Inequalities 11%
Other 13%
So, 48% of Americans cited just two reasons why capitalism was not working, that it generated greed and created poverty. Perhaps it is not surprising then that Pope Benedict, in Caritas in Veritate argued that ‘in terms of the resolution of the current crisis, the State’s role seems destined to grow.’[3] This in itself raises all sorts of questions about freedom, taxation, the family and so on.
In Matthew 26:10 Jesus told the disciples, ‘the poor you will always have with you.’[4] Some Christians have responded to this statement with complacency in the face of social evil. Jesus’s point is taken at face value; his words should not be contradicted and serve as reassurance, a reminder that Christians cannot fully eliminate poverty. This has left the field open for a very different approach from some evangelicals. This group does not take the words of Jesus in a literal sense but instead grounds its claims in the trajectory of Scripture that sheds light on divine love for the poor, but which is interpreted as a ‘bias’ or ‘preferential option’ for the poor.
So, there is the dilemma for us. Does the market economy create wealth or poverty, does it generate opportunity or greed? What I want to show is that for the Christian, wealth creation is actually a spiritual imperative, but that it carries awesome responsibilities and consequences. Only when we have had this discussion can we effectively debate how social justice is to be met, the role of government and so on.
Wealth creation as biblical imperative
The basic reason why wealth creation is a biblical imperative is that it is a creation mandate. What we mean by a creation mandate is something which is set out by God as part of the principles of creation for all people for all time. So let me illustrate and explain.
In Genesis chapter 2 , verse 15, we are told the following; ‘The Lord God took the man and put him in the Garden of Eden to work it and take care of it.’ This short verse has enormous implications. The command to work precedes the entry into the world of sin and the fall. In other words part of God’s intention for every person is that they work, they harness the resources of the world in producing goods and adding value. This basic requirement also has implications for any government programmes that encourage dependency rather than work.
Reinforcing this verse, there is a remarkable description of what God has provided for those who work the land. In describing the Garden of Eden and its setting in Genesis 2:8-14, we read that God had provided trees and water but that also between the head waters of the rivers which flowed out from Eden, God provided three precious materials – gold, aromatic resin and onyx. So, in other words, alongside the command to work is the provision of precious stones, metals and resins all of which can be used in the production of bowls and plates, jewellery and medicines. In the creation narratives God provides the command and the materials. Hence the creation of wealth is a spiritual imperative.
In the New Testament we see the same emphasis set out for us in the parable of the talents in Matthew 25:14-30. Each person was equipped with an amount of money related to his abilities and they invested the capital and obtained a return (well, two of them did). Their diligence was rewarded with more. The unfaithful servant was berated for failing even to put the money on deposit. In essence this parable is about our spiritual responsibility to use our gifts and talents to obtain economic returns though effective stewardship and investment.
Entrepreneurship as call and gift
The second area to explore is that of recognising that economic creativity and innovation (or entrepreneurship) is in fact both a gift and a call from God. We see this illustrated first of all in Exodus, especially, chapter 35. After the people of Israel had escaped from Egypt, Moses received instructions for the construction of a tabernacle to provide the focal point of worship. In Exodus 35:30, he points to one individual, Bezalel, and asserts that God has filled him, ‘with the Spirit of God, with skill, ability and knowledge in all kinds of crafts,’ referring to his ability of working with gold, silver and wood in order to prepare the tabernacle. It is interesting that the materials mentioned are so similar to those referred to earlier in Genesis. Moses adds, in verse 34, that the Lord had also given him ‘the ability to teach others’.
We see here the coming together of crucial theological and economic concepts. Notice the centrality of the flourishing of the human person, who has been endowed with skill, but note also two other crucial economic concepts, growth (that is, adding value through the combined use of resources and skill), and human capital, that is education and the training for the acquisition of such skills.
The divine economy is an enterprise economy and an entrepreneurial one. We would do well to honour, rather than disparage, those that create wealth and take entrepreneurial risk. Not only is the divine economy an entrepreneurial economy, it is also a place of call. In other words Christian men and women do not work in this part of the Lord’s vineyard either by accident or simply as a means to an end. Rather they are called by God to work in commerce, law, banking, manufacturing, service industries, IT and so on. It is a basic, but fundamental concept. If we understand that our business and commercial life is part of our call from God to work in his economy for the common good of all then we at once begin to deal with the ethical issues which arise. Recognising that our call is from God will help us make good business decisions, good ethical decisions, and act responsibly and well. This of course goes right back to Luther, but also note this from the Roman Catholic Pontifical Council for Justice and Peace.
The vocation of the businessperson is a genuine human and Christian calling. Its importance in the life of the Church and in the world economy can hardly be overstated. Business leaders are called to conceive of and develop goods and services for customers and communities through a form of market economy. For such economies to achieve their goal, that is, the promotion of the common good, they should be structured on ideas based on truth, fidelity to commitments, freedom, and creativity.[5]
Wealth creation and spiritual responsibility
So, we have established that wealth creation is a biblical and spiritual imperative and that entrepreneurship is both a call and a gift. There remains an important further aspect. If we have this wealth, what do we do with it? What is the responsibility of the individual with wealth?
The key starting point is to recognise that we do have a spiritual responsibility. The mistake is to think we are called to become poor by giving everything away or that the responsibility for dealing with poverty lies with the redistributive policies of central governments. This is a moral issue. The first call upon our wealth is too love God. The second call is to love our neighbour. The greater the proximity of the neighbour the greater the responsibility.
Hence our prime responsibility in loving our neighbours is to our families. That is one reason why Christians should campaign for low taxation, not high taxation. An extra pound raised by government is a pound less for our families and for serving the Lord. There is no special morality attached to a government pound.
The key in understanding the response to wealth lies in recognising the variety of ways in which the New Testament deals with Luke 14:33:
So therefore, any one of you who does not renounce all that he has cannot be my disciple.
What does ‘renounce’ mean? Well, it doesn’t mean don’t make a profit – for some 20 years Jesus himself worked in his earthly father’s carpentry business which presumably made profits in order to be sustainable over that time. We know that the apostles left behind their homes and livelihoods but without selling off all their possessions (Luke 5.11, 27; 18.28-31). The Rich Young Ruler, by contrast, is told to liquidate his assets and distribute them to the poor (Luke
18.19-27), whereas Zacchaeus only promises half his goods plus restitution (Luke 19.1-10). The women disciples (Luke 8.1-3) never divest themselves of wealth, but instead use their resources to support Jesus and the Twelve on an on-going basis. Paul works as a craftsman in order to support himself and provide for the needs of his companions and those in need (Acts 20.33-35). There is also Lydia (Acts 16) who was a merchant woman who gave hospitality in her house to the believers.
The market and its morality
So, we have seen that wealth creation is a spiritual imperative but that it carries spiritual responsibility. Let me now turn to the market itself, its strengths and weaknesses from a Christian perspective.
A market is essentially a place where buyers and sellers come together to exchange. The market through its pricing mechanism allocates resources. The origins of the understanding of the modern market economy lie with Adam Smith and his publication of the Wealth of Nations in 1776. Smith viewed the market as the best place to achieve the allocation of scarce resources mainly through the division and specialisation of labour. Importantly, Smith built upon a prior work, The Theory of Moral Sentiments (1759). He assumed a natural propensity to barter together with an essential selfishness in humanity. Crucially the effect of the economic mechanism is to bring about, not only the satisfaction of others, but indeed the welfare of all, by each serving their own interests. In this way a greater public good is achieved. This was the essence of the ‘invisible hand.’ The question was, if the hand existed, to whom did it belong?
The paradox in the classical model between the pursuit of self-interest on the part of individuals and the overall achievement of the public good could only be explained by the providential design of those laws of economics which brought this about.
Historically, evangelicals have, generally, held a positive view of wealth creation and enterprise and then adopted the voluntary principle, which we will come to, in how they have sought to deal with poverty and disadvantage. Market principles and virtuous compassion have defined this approach. Indeed because the market is part of God’s provision, behaviour, compassion and responsibility are crucial components of a Christian vision for society. The evangelical thus views the market not simply as a system of resource allocation, but also as a place where discipleship is exercised or even learned. From this comes ethics and behaviour. When the creativity, innovation and dynamism of the market are combined with the voluntary principle the result is a radical conservative approach to the challenges of poverty.
So, the leading Scottish evangelical, Thomas Chalmers, in the second volume of his Natural Theology, said that the market ‘strongly bespeaks a higher agent, by whose transcendental wisdom it is that all is made to conspire so harmoniously and to terminate so beneficially.’[6]
Two particular problems arose from this model, namely, the impact of sin and the possibility of inequality. Sin, as we have noted, distorted the market, through the sinful acts of the market’s participants – unethical behaviour. In economic terms this led to disequilibrium; in Christian terms to poverty and suffering.
The quest for social justice
How then did these early evangelicals respond to poverty?
The answer lies in the acceptance of the classic economic model alongside the voluntary principle, which involved both the rejection of state intervention and the development of voluntary organisations, which in turn provided an appropriate setting for the exercise of philanthropy – the market plus the voluntary principle.
For Chalmers, government intervention was not only unnecessary but also arrogant as it sought to usurp the Creator from his rightful position. In addition any extensive role for the state had the effect of taking over those things which truly belonged in the heart – the moral sentiments. As he put it, ‘we cannot translate beneficence into the statute-book of law, without expunging it from the statute-book of the heart.’[7] Compulsion would lead to the ‘extinction of goodwill in the hearts of the affluent and of gratitude in the hearts of the poor.’[8] Chalmers shows great Christian insight at this point. He understood that the nature of the human person not as a depository of ‘rights’ but as an individual with a will, a conscience, indeed, a moral personality. The intervention of the state had led to duties being replaced by rights, to dependency rather than freedom.
In the changing industrial landscape of nineteenth-century Britain a wide spectrum of voluntary societies developed, ranging from visiting societies, savings clubs, loan societies (an early example of micro-finance) and poor relief societies to schools and both social and evangelistic missionary societies. Many of these were linked to the Earl of Shaftesbury and evangelical voluntary action. The attraction of the voluntary society was that it enabled the proper provision of social welfare to be kept separate from state intervention. It also allowed a distinction to be drawn between deserving and undeserving poverty. The voluntary visitor operating in a local area was quickly able to ascertain the degree to which applicants themselves were at fault. This more easily enabled relief to be temporary rather than becoming enshrined as a legal right; state aid depersonalised poverty relief.
Conclusion
The market economy is not perfect. However, critics, especially Christian ones, often display a simplistic approach to economics, especially in matters of growth and enterprise and make assumptions about the role of the state, redistribution, taxation that historically sits ill-at-ease with Christianity.
The evangelical response to poverty depends upon a dynamic understanding of God’s providential provision of the market together with the practical application of the moral sentiments to compassion implanted in the heart. The need for compassion and care is a result of sin which leads to behaviour which distorts the market. So evangelicalism’s embrace of the ‘invisible hand’ is neither an unthinking nor an unlimited adoption of the free market. Rather it is an acceptance of the nature of divine provision with the application of Christian moral values. The voluntary principle lies at the heart of the thesis because without it government becomes all powerful, the opportunity for Christian morality and discipleship in the market place is lost and, hence, God’s good and gracious provision is denied. This has been well articulated by Professor Roger Scruton:
The first act of totalitarian governments is to abolish the charities through which people help themselves, and which are the main obstacle to creating the total dependence of the citizen on the State.[9]
So, for the evangelical, there will be a real emphasis on the market, on selfhelp, and on incentives to work; but alongside that lies compassion on the ground through the voluntary principle. In this way innovation flourishes, philanthropy is encouraged, compassion is exercised and the gospel maintained.
[1] Pope Benedict XVI, Caritas in Veritate, p49
[2] All biblical quotations are taken from the New International Version
[3] Irving Kristol, in The Disaffection from Capitalism and Socialism, quoted in Griffiths, Morality and the Market Place.
[4] M. Novak, The Spirit of Democratic Capitalism, p13
[5] Vocation of the Business Leader, Pontifical Council on Justice and Peace, paragraph 6
[6] Ibid., page 137
[7] Chalmers, Natural Theology, volume 2.4.4.6, in Works, page 128
[8] Ibid., page 130
[9] Professor Roger Scruton, Charity, Conservative Home Thinkers Corner, 11th February 2012