The Financial Seminary
Why Democratic Capitalism May, or May Not, Be Christian, But Certainly Isn't Biblical
"I am for the free market. Even though it doesn't work too well, nothing else works at all. But I have serious reservations about capitalism as a system because it idolizes economics as the be-all and end-all of life. It is one-dimensional....Today, I believe it is socially and morally unforgiveable when managers reap huge profits for themselves but fire workers. As societies, we will pay a high price for the contempt this generates among middle managers and workers. In short, what it means to be a human being and treated as one are not incorporated into the economic calculus of capitalism."
Managing in The Next Society
Now that the presidential election is over, I feel even more free to spout off about one of the ironies I observe most days of my life: how so very many "Bible believing" Americans now think democratic capitalism is Christian, even biblical. As you read, I hope you'll kindly remember two facts: 1) I've likely not voted for either candidate as the GOP has again deep sixed the moral issues with which I'm concerned, and 2) capitalism has provided my family a nice standard of living the past thirty years. I'm appreciate for that, perhaps so much that I hate what has happened to it. And like Tocqueville, I'm doing my best not to let my personal financial interests dictate my moral worldview.
Many of us think--as well as give and vote--that capitalism is biblically Christian due to the influences of ministries. Yet the heads of many such ministries have never worked a day in that temple of democracy we call Washington or the canyons of capitalism we call Wall Street. I've also found that ministers and money are usually oil and water. So much of what we hear about capitalism in particular is quite different from what famed management consultant Peter Drucker, who taught theology before counseling some of the world's largest corporations and non-profits, used to teach. This is called "asymmetric information," and our success as humans, and particularly Christians, often depends upon in which stream of information we choose to swim. It's a question of the chicken or the egg whether America is more polarized due to NPR and Fox or whether NPR and Fox are a result of our polarization. But there's no question America is not progressing toward the one mind of Christ, and that's likely due to the leadership of our churches.
Like many businesspeople, I often wish more ministry heads understood just a few of the dozens of less than Christian activities I've observed, by supposed Christians no less, during thirty years on Wall Street. When I retire, I may even write a book about those activities, not as a kiss and tell but simply so ministers might better understand some of the people they see in church on Sunday morning are not the same people I see in the marketplace from Monday to Saturday, even if they are ostensibly the same. Then more ministers might again focus on the biblical teaching that as long as we humans are sinful, no system of political economy will be godly. They might also understand they are too often dependent upon the donations and graces of the wealthy and powerful to truly speak about the hard realities of our culture, as Drucker did above. Until then, those of us listening to such ministers might remember that unlike money, influence truly trickles down. A couple of examples from the past few months might help you better understand.
One ministry that is particularly influential with conservative Christian foundations reviewed a new book entitled Defending the Free Market by Father Robert Sirico. I had the privilege of speaking again with Father Sirico only recently. It was at a gathering of Christian conservatives, at which someone was giving away copies of The Morality of Capitalism. It has to be the most confusing book, both morally and economically, that I have ever read. For example, Section One is entitled "The Virtues of Entrepreneurial Capitalism." It immediately throws the uninitiated off-balance by interviewing John MacKay, the respected founder of Whole Foods. Mr. MacKay is famous for having a far wider perspective of business, advocating what many of us call "stakeholder" or "socially responsible" capitalism.
That simply means corporate management should not simply care about themselves, as has too often been the case recently, or even simply care for shareholders, but also care for neighbors like employees, suppliers, customers and future generations by caring for the environment. Mr. MacKay therefore immediately questions the individualism "of Ayn Rand and economists" like Milton Friedman who famously taught the only social responsibility of a business is to make money. In his book Post-Capitalist Society, Peter Drucker pointedly described Friedman's narrow perspective as "futile." He knew no president can reduce unemployment when CEO's are given bonuses for getting more and more from every fewer employees. Still, Drucker was respected by as many corporate leaders as anyone I've ever known. And in his book The Pension Fund, Drucker even stated: "If socialism is defined as 'ownership of the means of production'--and this is both the orthodox and rigorous definition--then the United States is the first truly 'Socialist' country [as workers own most of America's stock through their pension funds]." Having taught theology, Drucker certainly understood why Reinhold Niebuhr said any serious Christian must be a socialist, though not necessarily a statist, believing government must control and re-distribute wealth.
Yet another contributor to The Morality of Capitalism, who works in a libertarian think tank, is equally diverting to the young business students for whom the book is intended when he naively writes: "Of course, nobody actually believes in the sort of 'atomistic individualism' that professors and pundits like to deride." Yet Ayn Rand's gospel of atomistic individualism entitled Atlas Shrugged is often cited as the most influential book among our nation's elites in Washington and on Wall Street. It has famously been cited by Alan Greenspan, Paul Ryan, Clarence Thomas, Ted Turner, Michael Milken, the former head of BB&T Bank and many others as a major influence in their thinking. And sure enough, a later contributor to the book, who also works for a libertarian think tank rather than a business, suggests Rand's atomistic individualism is the way for America to reach its promised land.
In short, I'm terribly afraid that after reading The Morality of Capitalism, a student not yet experienced in the real world of business might not have the discernment to wonder: "Are we talking about the capitalism of ivory tower philosophers like Ayn Rand and Milton Friedman or the down to earth capitalism of Peter Drucker and John MacKay? That question was reflected in the recent election. My progressive friends thought Governor Romney was a "flip-flopper," schizophrenic or just willing to say anything to get elected. I saw him as a decent man whose religious beliefs caused him great tension when trying to relate to the conservative and libertarian wings of the Republican Party.
For such reason, I expect Father Sirico's book might be a better read for most of us, though I haven't read it yet. Over the years, he has attempted to bring a little more heaven to earth by being far less double-minded and far more holistic. He is usually most thoughtful, sincere and graceful. But he's not God and his book isn't gospel. So readers should clearly understand that he's also tended to be so conservative, perhaps libertarian, that he has been a frequent contributor to the editorial pages of The Wall Street Journal. That drives many of his fellow Catholic priests a bit crazy as they understand what C.S. Lewis was getting at when he said the ancients would never have condoned the earning of interest that is the basis of capitalism. I expect most also know Moses was less than confident in the will of the people after his experience at the base of Sinai, as was Jesus after Pilate asked if the people preferred Jesus or Barabbas. Even my friend John Templeton suggested the second book we all read after the Bible was Extraordinary Popular Delusions and the Madness of Crowds. Suffice it to say it more or less agreed with a founding father, Madison as I remember, who said democracy was possible only with a Christian populace.
Yet despite those biblical tensions with democratic capitalism, the book review from the ministry began by confidently telling us that Father Sirico's new book begins with the highly debatable statement: 'Socialism has been discredited." Such questionable pronouncements are cultural, particularly among the conservative clergy, and are typical of our politicized times. They're also likely why another Christian acquaintance recently a newspaper article to me that was headlined: "Destroying America from Within." It began: "President Barack Obama has been trying to transform America to become more like a European nation, to be another socialist state. Obama's 'transformation' to socialism is a serious matter, and could very well be the end for America as a free nation and super power."
All that would be well and good, and perhaps Christian, if it was grounded in economic reality. But even the pro-Romney forces knew it was nonsense. For example, one anti-Obama ad by a super-PAC that ran over and over in my neck of the woods decried the fact that under Obama, the US economy is now ranked seventh in the Global Competitiveness Survey. What the ad conveniently failed to mention, in a fashion that has become habit in American politics, was that five of the six nations ranked ahead of us are the European nations that the president is supposedly trying to emulate, even while federal taxes have declined in his first term until they are the lowest since WWII, at 15% of GDP. Those nations, and the non-European exception, are, in order: Switzerland, Singapore, Finland, Sweden, the Netherlands and Germany. The nations just under the US include: the United Kingdom, Denmark, Norway, Austria, Belgium, France and Luxembourg. We just associate Europe and socialism with decay as our media always focuses on the negatives, which are primarily in southern Europe.
As I've also shared in these classes, even Forbes magazine has published an article that there is much we might learn from Denmark. It has the happiest people in the world, lower unemployment with more retraining for the unemployed, a higher economic growth rate, a more dynamic business climate, higher per capita wealth and much less federal debt related to GDP. Yet its government takes about 50% in taxes of what the average Dane makes while our governments take about 30%. I've noted the president's friend Oprah Winfrey once did a special on Denmark, probably as he and she do not think all that's entirely bad. If asked where he would like to see our federal taxes in four years, I can imagine Obama saying 18 to 20%, which is where they've been since WWII. But I can't imagine him publicly stating anything as radical as the 8% that anti-taxer Grover Norquist seeks when having the GOP sign his famous pledge. That's truly "right wing social engineering" of the experimental and utopian sort.
I obviously don't care for the secularization of Europe, anymore than the secularization of America, but I expect the poor of the third world have a higher opinion of Scandinavian-style socialism than do many of our clergy. As a Lutheran, I understand that even Northern Europe is increasingly secular. But I also see remnants of the Protestant ethos regarding charity toward neighbor at work. For example, Christian ministries like Opportunity International, on whose board I served, engaged in work among the third world poor know the Scandinavians give multiples of what the US does as official foreign aid. Religious sociologists, like the evangelical Barna Group and Robert Wuthnow who studies the mainline at Princeton, also know Americans may go to church a lot more than Europeans do but we also compartmentalize our faith from our daily lives just as often. Peter Drucker might suggest it's time we Christians grow more humble, as well as less parochial and politicized, so that we might consider the "best practices" of our neighbors around our Creator's world.
Gary Moore is a Sarasota-based investment counselor who has authored many publications and articles on the morality of political-economy and personal finance. He is a registered representative of, and offers securities through, National Planning Corp (NPC), member FINRA/SIPC, but opinions expressed here are his alone. The Financial Seminary and NPC are separate and unrelated. His comments are included in the More Good $ense newsletter in an effort to expand stewardship leaders’ understanding of broader economic issues.