Reforming Economics: Capitalism and Its Discontents
The biggest losers of the financial crisis.
The economic downturn of recent years— "The Great Recession," as it has been popularly called—has spawned a plethora of responses in the public square. This period of large-scale economic instability, initiated globally with the collapse of the housing market in the United States and continuing through the sovereign debt crises affecting a number of nations in the developed world, has given rise to a cottage industry of blame, with opinion columns, feature-length commentaries, and trade books meting out their form of retributive justice. Sometimes the pen of the press must reach where the sword of the state is unwilling (or unable). But beyond the question of whether Wall Street, Main Street, or Pennsylvania Avenue deserve the lion's share of blame, the conflux of social and economic factors resulting in the crisis has left the public square openly wondering about the viability of the free market. The one thing that all the critical voices responding to the ongoing economic turmoil in the world agree on is that capitalism has some serious, if not fatal, flaws.
A global public opinion poll released earlier this year speaks to the pervasiveness of such conclusions. Conducted by the Canadian research firm GlobeScan, the poll displayed, as The Economist summarized, "another, perhaps more serious form of damage: falling public support for capitalism." In the United States, for instance, the percentage of respondents who agreed that "the free-market system is the best" fell from 80 percent in 2002 to 59 percent in 2010. The results for Canada in 2010 were roughly the same, with the only significant difference being that a larger percentage of Canadians were more tempered in their agreement (39 percent of Canadians agreed "somewhat" while only 20 percent agreed "strongly"). The biggest loser of the recent financial crisis, it seems, may well turn out to be global capitalism itself.
And yet we must not allow the very real and very pressing dilemmas facing us individually and communally to overshadow the equally real successes that market economies have engendered. As the recently launched Project58, an "actionbased, global alliance of Christians, churches and world-class poverty-fighting organizations working together to end extreme poverty," rightly observes, the number of people living in extreme poverty in the world has been cut in half in the last two decades alone. This kind of amazing economic development has been made possible in the framework of economic globalization, and it is this reality that provides such organizations the practical hope of realizing the goal to "end extreme poverty in our lifetime."
And so while technical and particular solutions offered in the context of debates over public policy have their place, the most promising avenue for the reform of our economic system is to be found in restoring the various spheres and institutions of social life to their rightful place in pursuit of their rightful purposes. After briefly embedding markets in a normative vision of the good society, I will focus in more detail on the economic realm and some concepts that have been largely lost or underappreciated, and that need to be recovered in order to reform economics. These themes will be explored under the rubric of two sets of pairs: sustainability and stewardship, and service and shalom.
Putting Economics in Its Place
The history of Christian social thought has consistently emphasized the normative nature of God's commands for all of human existence, and since at least the time of the Reformation these commands have been usually understood in terms of four basic structures of social life: family, culture, church, and government. The consistency with which Christian thinkers from a variety of traditions have identified areas of life roughly corresponding to these structures speaks to the definitive nature of this framework. These basic institutions, or their correlates, can be found in thinkers as diverse as the Puritan Richard Baxter (1615-1691), the German jurist Friedrich Julius Stahl (1802-1861), the Dutch Reformed theologian and statesman Abraham Kuyper (1837-1920), and the Lutheran pastor and theologian Dietrich Bonhoeffer (1906- 1945). Sometimes the relationship between these institutions is defined in different ways, such that the realm of the family is understood within the larger context of "society" (as in the case of Kuyper), or there is overlap between the realm of the family and the realm of culture (as in the case of Baxter). Likewise, these structures are often identified by different names, whether "spheres" in the case of Kuyper or "mandates" in the case of Bonhoeffer. The reformer Martin Luther and his followers preferred to speak of three "estates," or of the "orders of creation," while Reformed thought tends to use the language of "institutions" to describe these realities.
But in all cases, there is a characteristic sensitivity to the variegated nature of human social life. No one sphere or institution exists at the expense of all the others. And so it is within the context of this larger framework of social thought that Christian reflection on economic aspects of life must be situated. All of these institutions together, when they are working properly and in harmony, create the conditions in which individuals and larger communities can exist and flourish. Each sphere or institution has its own particular task for which it is fitted, a basic purpose that it must fulfill.
So, for instance, the family is the structure that is primarily concerned with manifesting the biblical blessing to "be fruitful and multiply" (Gen. 1:28). As the area of life concerned with cultivation of created realities, particularly (although not exclusively) related to meeting material needs, the cultural sphere is where we work out the corollary creation or dominion mandate: " . . . fill the earth and subdue it. Rule over the fish in the sea and the birds in the sky and over every living creature that moves on the ground." The realm of government is the institution fitted for keeping civil order in a fallen world, tasked as the Apostle Paul puts it, "to bring punishment on the wrongdoer" (Romans 13:4). The Belgic Confession, a doctrinal authority in the Reformed tradition, understands the responsibility of the civil government to fulfill God's intention for the "world to be governed by laws and policies so that human lawlessness may be restrained and that everything may be conducted in good order among human beings" (Article 36).
These three spheres of life constitute what is usually understood as the channels of God's common or preserving grace, focused particularly on the basic ongoing needs for human life together. The church represents the institution in which God communicates his special, saving grace. The church has the responsibility to respond faithfully to the Great Commission, in the words of Christ to "go and make disciples of all nations, baptizing them in the name of the Father and of the Son and of the Holy Spirit, and teaching them to obey everything I have commanded you" (Matthew 28:19- 20). Again, as the Belgic Confession puts it, the church "engages in the pure preaching of the gospel; it makes use of the pure administration of the sacraments as Christ instituted them; it practices church discipline for correcting faults" (Article 29).
The purpose of presenting this brief primer on Christian social thought is to properly orient the following discussion about economic aspects of human life. Each of these institutions has its own unique and sovereign role to play in promoting human flourishing. Different thinkers have related and ordered the various institutions in different ways, but Christian social thought has unanimously recognized the pluriformity of the structures of social life. The fact that the Greek root word for economics (oikonomia) originally referred to the ordering of a household speaks to the basic importance of marriage and the family, for instance. But in no case is any one of these spheres to be understood as ultimately independent of the others. The Lutheran writer Ryan C. MacPherson speaks to the basic interdependence of these institutions, focusing particularly on the family and the government, as he observes, "What harms the family will ultimately ruin society and civil government, and vice versa; similarly, what strengthens the family ultimately will improve society and civil government."
The variety of social institutions finds unity in each individual's relationship to each of these aspects of life. That is, the individual person is to be understood as relating simultaneously in various ways to each one of these spheres. Sometimes Christian thinkers speak of a variety of different "callings" or "vocations," in that a single person might have one calling to be a father, another to be a citizen, and another to be a dockworker. But a better way of thinking about the unity of these diverse relations is to understand that as Christians we have a single calling, to follow Christ, which manifests itself in a variety of human relationships. Thus, an individual person might have a calling to follow Christ in various ways, as a sister, a teacher, a small group leader, and a coach.
With this understanding of calling with relation to the various social spheres, we can properly locate those aspects of our individual callings that relate to economic matters. Just as no single institution is to tyrannize or impose itself upon the others, no single aspect of our vocation is to exclude or usurp the proper place of the others. The devolution of social life is typically attributable to the overreach of one institution into the rightful realm of others, either through outright tyranny or as a stopgap response to the failure of another institution.
What is usually understood as economic relates to the sphere connected to the cultural mandate. In particular, our economic relationships are intended to be the regular means by which God provides us with "our daily bread" (Matthew 6:11), the process of transforming part of the natural world, like grain, to something necessary for human survival, like bread. This natural relationship between work and material sustenance is made explicit when the Apostle Paul issues this rule: "The one who is unwilling to work shall not eat" (1 Thessalonians 3:10).
Sustainability and Stewardship
The first pair of concepts that must be recovered in order to reform our economic relationships to accord with this basic purpose, to properly orient our focus on material wealth, production, and acquisition, are those of sustainability and stewardship. When sustainability enters contemporary discourse on economic matters, it is usually from the perspective of preservation of some aspect of the natural world, such as rivers, forests, and animals. But sustainability is not simply a norm for environmental concerns. It is, in fact, a normative value that has been consistently ignored or overlooked in much economic practice today.
More consistent consideration of sustainability as a norm for economic exchange would have some very important implications. The massive growth in levels of both public and private debt in the United States, for instance, are evidence that the economic growth enjoyed over that same period of time are in some very real sense artificial and unsustainable. For 2011, for instance, in both the United States and Canada, government expenditure accounts for nearly forty percent of GDP (38.9 and 39.7 percent, respectively). But in the U.S., in recent years roughly 40 percent of that government expenditure has been above and beyond what has been taken in via taxation. This means that since 2009, the percentage of GDP represented by deficit spending by the federal government has been between 9-10 percent (10.01 percent in 2009; 8.82 percent in 2010; 10.91 in 2011). This represents a significant element of ostensible economic growth that is patently unsustainable, since such deficits are, as political economist Michael Munger put it, "future taxes."
On the consumer side, a commitment to sustainability entails a lifestyle that is not financed by chronic reliance on unsecured debt, like credit cards. That the message of sustainability has struck a chord in North America is evidenced by the popularity of common sense financial strategies like those offered by Dave Ramsey. For corporations, the idea of sustainability is concomitant with the basic economic lesson of forgoing the lure of short-term profits that destroy the foundational store of capital. But for executives with a generous benefits package in reserve, focusing solely on maximizing quarterly profits can seem attractive. When sustainability is a virtue, the corporate equivalent of eating the seed corn is no longer a viable option.
This is why the corollary to sustainability is the concept of stewardship. Based on the fundamental relationship between the Creator and humankind made in the image of God, the idea of stewardship is a basic way that human beings relate to the world. A steward is one who has been entrusted with something by someone else. As
the Apostle Paul writes, "Now it is required that those who have been given a trust must prove faithful" (1 Corinthians 4:2). The steward has the authority and responsibility to discharge his or her duties with faithfulness.
In this sense we can affirm that stewardship must be expanded and applied beyond the standard areas of the environment and financial generosity. This is a point that has been made comprehensively and persuasively in connection with the scriptural witness by the NIV Stewardship Study Bible. Each human being has a stewardship responsibility over some aspect of creation, small or large. Rudy Carrasco, a veteran of urban and global ministry initiatives, puts it strikingly,
Every single person on the face of the planet is created in God's image. Everybody has the same heavenly Father. Everybody has capacity, talent, and ability. Everybody has responsibility. Everybody has stewardship responsibility . . . You have a responsibility to be a steward of the resources under your control because you have a heavenly Father who has put great things inside of you and that's waiting to be called out and developed and extracted.
The social implications of this perspective are enormous. There is no such thing as a human life that is not valuable, that is not able to contribute to the common good in a qualitative or quantitative way. Human beings, as a matter of economic policy, should be viewed as intrinsically creative, dynamic, free, and responsible. Welfare policy, where and when it must be implemented, should be designed to remove impediments to self-sufficiency and encourage individuals and families to actively care for and develop whatever stewardship responsibilities they possess.
Service and Shalom
The idea of stewardship requires some orientation, however. The purpose for which things have been entrusted to us must have some content in order for us to understand the means to achieve divinely-mandated goals. In this sense we must understand stewardship as oriented toward the norm of service, which defines the function of economic enterprise. The basic purpose of business must therefore be redefined. In a fine book about the purpose of business from a Christian perspective, Jeff van Duzer, a dean and professor of business and economics at Seattle Pacific University, writes that business and economic relationships matter to God because people matter to God. "What is the proper purpose of business? To what end should a company be managed if it is to best glorify God?" asks Van Duzer. "A business exists to serve," he answers.
For too long a view has held dominance that has portrayed profit as a purpose or end, rather than as a means or a consequence. That is to say, the pursuit of profit is acceptable when it is couched within the broader framework of and constrained by the norm of service of others. Make no mistake: profit remains indispensible. As van Duzer writes, "Profit is not easy to come by, and generating profit is critical to the health of the organization. It just isn't the purpose—the why— of the business." Profit is, in fact, a meaningful signal that the product or service a business provides is actually valued by its customers and clients. When people value what a business does for them enough to pay for it, indeed, enough to pay an amount that allows the business to be profitable, this is a very clear indication that, at least from the perspective of the client (who is in the best position to judge), a real service is being performed. As Reformed thinker Lester DeKoster writes, "We find work to do, in fact, only because what we do is useful, that is salable, to another."
In this way, work in the economic areas of life becomes one of the ways that we are called to fulfill the second great love commandment, "Love your neighbour as yourself" (Mark 10:31). But in order to fully understand how faithful service in economic relationships contributes to human flourishing, to shalom, it must be established how loving our neighbours in these concrete ways relates to the first great love commandment: "Love the Lord your God with all your heart and with all your soul and with all your mind and with all your strength" (Mark 10:30).
In a small but significant book on the subject of work (aptly titled Work), DeKoster makes the compelling case that by serving others, in the varied economic roles present in modern life, human beings actually fulfill God's ordained purposes for our lives. "Work," he writes, "is the form in which we make ourselves useful to others." But this usefulness to others is significant in part because "God himself chooses to be served through the work that serves others." So by faithfully serving others, we make ourselves useful to God. This is the reason that Martin Luther observed that "all people placed in the position of neighbours . . . have received the command to do us all kinds of good. So we receive our blessings not from them, but from God through them. Creatures are only the hands, channels, and means through which God bestows all blessings." This perspective on work, business, and economic relationships clarifies how this sphere of activity contributes in a distinctive fashion to the comprehensive Christian vision of social life.
First World Problems
It has become more common in recent years for Protestants to draw on the tradition of social teaching offered by the Roman Catholic Church, if for no other reason than, in the words of Lutheran theologian Carl Braaten,
the Roman Catholic Church has produced a comprehensive body of social teachings on most issues of human concern. Even when we do not agree with the Roman Catholic application of natural law in every case of moral dispute, there is much to admire about a church that knows where it stands on the critical issues of the day and offers cogent arguments to explain its teachings.
In the contemporary context of the crisis facing capitalism, it is worthwhile recalling that two decades ago in his encyclical Centesimus Annus John Paul II wondered about the prospects of capitalism in a global context. In answer to the question whether capitalism is "the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress," he answered affirmatively, if the term "capitalism" would be understood as referring to "an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector."
This assessment rings true from the perspective of those in the developing world today. It is instructive that on many accounts the attitudes in the developing world are much more optimistic about capitalism's prospects that those in developed nations. Where the previously mentioned GlobeScan poll shows stagnation and decline in positive attitudes toward the free market in developed countries, "the Chinese and Brazilians, 67 per cent of whom regard the free market system as the best on offer, are now more positive about capitalism than Americans, while enthusiasm in India now equals that in the USA, with 59 per cent rating the free market as the best system for the future."
A system within which service is valued, stewardship is expected, and sustainability is pursued is that which will tend to produce a more accurate earthly reflection of heavenly shalom. What J. Daryl Charles says of democracy, therefore, is equally as true of democratic capitalism. "Democracy," he writes,
wherever found, as a form of government cannot maintain itself effectively over the long term merely through its political and procedural resources; it is dependent on the larger web of human culture, of which religious faith and moral first principles are key elements that provide the enduring basis for a normative ethical code.
Certainly, the structural and procedural elements of the market economy like those highlighted by John Paul II are critical to its contribution to human flourishing. But these elements are not incorruptible. So while structural reform and policy solutions are necessary, the more foundational and ultimately more critical and long-lasting reform will occur through the work of moral formation and acculturation in and through all the spheres of human life.