The Financial Seminary
Please note, this article is Class Two of a series. Class One is available for viewing under the “Classes” tab.
“Only compassion can save--the wordless knowledge of my own responsibility to whatever is being done to the least of God’s children. That is knowledge of the spirit.” —Peter Drucker
During the recent election, most of my conservative clients were concerned then-Senator Obama would try to “save” the world’s economy with greatly increased government spending. The senator even joked during the Al Smith dinner that it was not true that he had been born in Bethlehem; that he had instead been born on Krypton, where Superman was born. Few clients thought even that more humanistic role would save them.
Yet no one seemed concerned when the cover of the November 8, 2008 Forbes, The Capitalist Tool, featured former presidential candidate Steve Forbes and the headline, “How Capitalism Will Save Us.” But despite my working on Wall Street and never having had a government job other than being an Army officer, it gave me pause.
During the mid-nineties, revered management consultant Peter Drucker wrote a prophetic book entitled Post-Capitalist Society precisely as he didn’t think capitalism would save us. Peter, as he liked to be called, had literally told Forbes magazine that executive compensation was “a disgusting spectacle” that reminded him of “pigs at the trough.” And he suggested there was anger brewing that would threaten our economic system. Though I was an advocate of moral markets and limited government, I had to sadly agree as I had too had witnessed egregious compensation at Wall Street firms.
It was about that time I coined the word “stewardism” to distinguish markets integrated with The Puritan Gift, a book by two friends, from the “free” markets of modern capitalism. As St. Paul explained the paradox, we must be “slaves” to that ethic so we can live in true freedom and prosper.
During class one I mentioned that contrary to conventional wisdom, it was the earning of interest (Ex 22:25) and not debt itself (Lk 6:35) that was forbidden by the Bible. Yet Christianity has long grown along-side ideas that germinated in three soils of the Middle East: Greek, Roman and Judaic. Most Greeks, like Plato, were socialists, or communists, but essentially what we call “liberals.” Today, they’d favor governmental health care, Social Security and so on.
The Romans, like Cicero, were “conservative,” believing the only true role of government was to protect wealth with large armies. Today they’d also favor the FDIC, Homeland Security, border fences and so on. But the economic thought of Israel transcended both human approaches by claiming God owns wealth and we stewards should manage it within a Judeo-Christian moral framework.
Faith & Wealth by Justo Gonzalez says those three ideas begat three different ideas about the earning of interest, and therefore capitalism. He quotes Socrates as saying the wealthy “do not want to prohibit the extravagance of the young (as) their intention is to make loans to such imprudent people…The money makers continue to inject the toxic sting of their loans wherever they can, and to ask for high rates of interest.” Apparently the Greeks allowed the earning of interest but considered it morally dubious. Yet Gonzales also wrote: “All the great writers of Roman antiquity are conservative (and) since the earliest of times, the maximum rate had been fixed at 1% simple interest per month, and this was generally the legal limit throughout the history of Roman legislation.” As the Bible attests, Romans weren’t known for loving their neighbors. C.S. Lewis confirmed Gonzalez’s perspective when he wrote these words in Mere Christianity:
“There is one bit of advice to us by the ancient heathen Greeks, and by the Jews of the Old Testament and by the great Christian teachers of the Middle Ages, which the modern economic system has completely disobeyed. All these people told us not to lend money at interest; and lending at interest--what we call investment--is the basis of our whole system [capitalism]…It does not necessarily follow that we are wrong. That is where we need the Christian economist. But I should not have been honest if I had not told you that three civilizations had agreed in condemning the very thing on which we have based our whole life.”
Notice three points: First, Lewis did not include the Romans as being concerned with charging interest. Second, he said the “great Christian teachers of the Middle Ages” had been. The Roman Catholic Church forbade earning interest until around 1500 AD. It was actually the Protestant Reformers who morally legitimated the earning of interest, if interest did not exceed 5% annually, the loan was for productive uses and not consumer purposes, and borrower and lender shared the risk equally. That change in moral thought helped legitimate banking, and therefore capitalism. Yet the Reformers continued to insist on interest-free loans to the poor. Luther actually taught: “Money lenders who do not want to put up with these terms are as pious as robbers and murderers.”
The Puritans brought that morality to America. In God and Mammon in America, Robert Wuthnow of Princeton tells the story of a Puritan merchant named Robert Keayne. In 1639, Keayne was thrown out of the First Church of Boston and was tried by the Commonwealth for dishonoring the name of God. His sin? Greed. He was earning 6%, 2% too much!
Prominent mutual fund manager John Bogel recently began his book Enough with this quote: “The people who created this country built a moral structure around money. The Puritan legacy inhibited luxury and self-indulgence…Over the past thirty years, much of that has been shredded.”
Doug Meeks, who authored God The Economist, believes the church helped to shred that ethic. He wrote: “The way stewardship is practiced in North America often has little to do with the Bible. It stems primarily from the most influential American theologian, Andrew Carnegie.” Carnegie is famous for saying a man who dies rich dies disgraced. But during his time, he was considered a ruthless businessman.
Teddy Roosevelt once said: “I’ve tried hard to like Carnegie, but it is pretty difficult. There is no type of man for whom I feel a more contemptuous abhorrence than for one who makes a god of mere money-making.” It is no secret that some of the most notorious CEO’s of recent years--such as Ken Lay of Enron with whom I served on a Christian board; Bernie Ebbers of Worldcom; and Richard Scrushy of Health South--were highly visible CEO’s who also gave substantial monies to churches and ministries.
The summer edition of the most conservative Claremont Review of Books confessed other conservatives have consciously worked to keep
God out of American business: “Many of the most visible capitalist intellectuals--giants like Milton Freidman, Fredrich Hayek, and Ludwig Von Mises--embraced a new moral case for capitalism that decisively rejected the old one based on the natural and divine significance of the individual. This new moral case was, either explicitly or implicitly, utilitarian and anti-metaphysical.”
Freidman was the thinking man’s economist. But some of us wondered about his heart and soul. He once said, “The church tends to believe it should exercise control not only over the spiritual realm but also over the material realm, and that’s where all the difficulties arise.” In Post-Capitalist Society, Drucker pointedly termed as “futile” Freidman’s famous dictum that, “The only social responsibility of a business is to make money.”
I once wrote The Wall Street Journal that Freidman’s term for the Third World poor, “under-utilized labor units,” did little to encourage ethics, much less compassion, in global markets. And our credit crisis and recession were caused precisely by the new capitalism rejecting the Judeo-Christian ethic and foolishly believing lenders could charge even higher interest rates to sub-prime borrowers than to prime borrowers like myself.
Yet the most secularizing of these capitalist philosophers has undoubtedly been Ayn Rand, mentor to Alan Greenspan, junk-bond king Michael Milken and tens of thousands on Wall Street and in corporate America. The Library of Congress has rated her book Atlas Shrugged the second most influential in America after the Bible.
That’s ironic as both Chuck Colson and Martin Marty agree they pretty much say the opposite, particularly about selfishness, which Rand deemed a “virtue.” At the end of Atlas Shrugged, Rand’s superhuman CEO savior makes the sign of the dollar across the world. It symbolized the moral purpose of our lives is now to make money, rather than to love God and neighbor. Yet in 1994, The Economist said Rand’s ideas were most popular with economic libertarians (who disdain government) and were instrumental in Reaganomics. Yet Rand taught “every argument for God rests on a false metaphysical premise,” charity is “not a moral duty,” and most importantly that capitalism and Christianity “cannot exist in the same man or in the same society.” She also taught that “abortion is a moral right” and had a very public affair. Not surprisingly, she died lonely and very depressed. Still, the head of BBT bank, a Rand disciple, recently told The New York Times that her philosophy of selfishness will soon dominate America. But while most church leaders ignore the root of all evil, evangelical leaders really avoid Rand.
So what do you do if you too are frustrated about choosing between Nancy Pelosi and AIG for your health care and/or Barney Frank and Wall Street for your retirement? Begin by understanding the Claremont Review’s statement: “Nor did [these capitalist philosophers] have much to say to social conservatives, who are an indispensable element of the political coalition upon which capitalism’s survival depends.” It is a false political choice that we must become Greek if we’re tired of pagan Rome. There has always been a third way of stewardism.
As Drucker wisely counseled, it’s a simple matter of accepting personal responsibility for what happens to neighbor, the least of these, the environment and future generations… when making money as well as giving money. Wall Street calls that idea “socially responsible investing” (SRI) and “corporate social responsibility” (CSR). Drucker, who also taught theology, believed only that sort of love can save us. Finally looking up after all these years of looking left and right while studying political science and working on the Street, I can now see his point.
Gary Moore is an investment counselor affiliated with NPC Of America, member FINRA/SIPC. The views expressed are his alone.
All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy.
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