Moral questions across the generations
Government debt is widely discussed in economics – and to a lesser degree in other social sciences – around questions of fairness and justice. However, it has not been discussed within Catholic social teaching documents or, for that matter, in learned discourse on Catholic social thought. There is a similar lack of reflection in the wider Christian tradition.
2.1 Principles from creation
The creation order plays a significant role in any Christian understanding of the economy. This is recognised in both Catholic social thought and Protestant Christian traditions. The principles established in the creation give a form and shape to the divine economy – and weight to the ideas of work, wealth and production in the biblical narrative. These are significant features of any economic system and establish the basis for economic growth, investment, innovation and entrepreneurship. As a result, the creation order provides a basis for reflecting on economic principles. What follows will seek to apply the principles established in the creation to reflect, from a Christian position, on the place and limits of sovereign debt within an economic system.
The creation order is established at the beginning of the biblical narrative. This appeal of the common Christian tradition to the first pages of Genesis also means that the divine economy must reflect something also of the very character of God. Importantly, these principles are relevant both in the state of perfection prior to the fall and in today’s economy in an imperfect world affected by sin:
These truths are decisive for man from the very beginning, and at the same time they trace out the main lines of his earthly existence, both in the state of original justice and also after the breaking, caused by sin, of the Creator’s original covenant with creation in man.[1]
The key point from Pope John Paul II here is that the creation order is decisive – not just ideally but also practically – in today’s world and economy. Consequently, discussions of the role of sovereign debt need to take account of God’s original purposes in creation, his character and the dignity the created order bestows on the human person. We should be wary of levels of government debt that deny either the divine provision of the means of production (stifling the creativity and innovation implicit in that provision) or the dignity intrinsic to all humans created in God’s image (through disproportionate impact on future generations). This is reinforced by a proper appreciation of the Christian view of the limited role of the state, discussed in Chapter 3.
Humans were placed at the pinnacle of creation by God and given the responsibility to act as stewards of the earth. As it says in Genesis, God told Adam and Eve to ‘Be fruitful and increase in number; fill the earth and subdue it’ (Gen. 1.28). This is known as the cultural mandate. The principle by which the goods of this world are there for all persons to enjoy is known in Catholic teaching as the ‘universal destination of goods’. It is impossible for everybody to enjoy all the goods of the world. To ensure they are distributed peacefully and fairly, the Church – and governments that follow its teaching, even if only implicitly – prudently employ certain principles of distributive justice. These will involve freedom of contract in labour markets, private property, intervention by civil-society organisations where freedom of contract produces unsatisfactory results, and redistribution of resources to those in serious need, including by governments. These are processes in which all institutions within society, including the family, are involved.
Nevertheless, this cultural mandate implies some form of economic activity, a point reinforced by the wider idea of creation mandates – commands laid out in the creation order that establish a number of basic principles around human purpose, creativity, dignity and liberty. Examples would include the mandate to subdue (Gen. 1.28), to work (2.15) and to create wealth (2.10–15). This latter is, as will be seen, also reinforced by derivation from the very nature and work of God.
Hence in respect of the mandate to work, Dorothy Sayers argues that, for an intelligent carpenter, ‘the very first demand that his religion makes upon him is that he should make good tables.’[2] And for Josemaría Escrivá, the founder of Opus Dei, it is not possible to be a good Christian and a bad shoemaker.[3] John Calvin (1509–64) noted in his Commentary on Genesis 2.15:
Here Moses adds that the earth was leased to man, on this condition, that he busies himself cultivating it. It follows from this that men were made to employ themselves doing something and not to be lazy and idle.[4]
There is, then, not only a creation mandate to subdue the earth but also to work. Abraham Kuyper (1837–1920), the Dutch neo-Calvinist and, indeed, Prime Minister from 1901 to 1905, remarked that ‘the common means of provision are latent in the created order and are discovered by human activity.’[5] This is a reminder of the centrality of entrepreneurship and wealth creation in the divine economy. Pope Paul VI, in his 1967 encyclical Populorum progressio, also draws attention to this aspect of the created order and its link to entrepreneurship and production:
By dint of intelligent thought and hard work, man gradually uncovers the hidden laws of nature and learns to make better use of natural resources … he is stimulated to undertake new investigations and fresh discoveries, to take prudent risks and launch new ventures, to act responsibly and to give of himself unselfishly.[6]
It follows from the idea of divine mandates to work and to subdue that there must also be a divine imperative to create wealth – otherwise the mandates to work and have dominion would be meaningless. And since the work of humanity is derived from the work of God, this would render his creative work also meaningless. Hence the principle of production, the ideas of creation and innovation, are part of God’s character – since he is the creator – and, by derivation, also part of human purpose.
This is further developed in Genesis 2. In verse 15 the mandate to work is set out: ‘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. Here, preceding the entry of sin and the fall, is a divine economic command, a mandate not to work for no purpose but to harness the resources of the world – God’s created world – in producing goods and adding value. Not only work per se but economic productivity and wealth creation are part of God’s intention for every person. This basic requirement also has implications for any government programmes that encourage dependency rather than work – and for government debt itself.
Reinforcing this verse, there is a remarkable description of what God has provided for those who work with the means of production. Concerning the Garden of Eden and its setting, Genesis 2.8–14 recounts that God provided trees and water but also, between the headwaters of the rivers that flowed out from Eden, three precious materials: gold, aromatic resin and onyx. Verse 12 states that the gold found in the land of Havilah is good – divine endorsement of a crucial precious metal that makes absolute sense when the command to work follows. Putting these things together, here are: the means of economic production within the created order; the command to work; and the provision of water, wood, precious stones, metals and resins. All are to be used in the production of goods and indeed in the development of entrepreneurship and commerce seen in Genesis 4, and the development of skills set out in Exodus 35.30–35. In the creation narratives, God provides the command and the materials. Hence the creation of wealth is a spiritual imperative.
In the New Testament the same emphasis is set out in the Parable of the Talents (Matt. 25.14–30). Each person was equipped with an amount of money related to his abilities and 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 spiritual responsibility to use gifts and abilities to obtain economic returns through effective stewardship and investment, and also warns against viewing equality as a goal in itself.
There is one further important building block, namely the creation mandate of the dignity of the human person. This derives directly from God’s own creative activity in making us in the divine image (Gen. 1.27). The dignity of the creative process and the dignity of the worker both derive from God’s own creative actions. This has implications for work itself, for the worker, for welfare and for the wider organisation of the divine economy.
Genesis does not say whether, or to what extent, government should borrow, and at what rate of interest, for either consumption or investment. However, the idea of the creation mandates furnishes some important principles, namely dignity, wealth creation and divine provision.
The key point from Christian theology is that the dignity of the human person is not restricted either to one generation or simply to living generations – the principle extends to all, across time, geography, wealth and any social status or standing. Wealth creation and divine provision are linked. If the idea of creativity is a divine characteristic, then so too is that of innovation – new ideas that reflect God’s character. God has provided the necessary raw materials – the classic factors of production – to provide for humanity, but that provision is neither fixed nor static and, reflecting God’s bountiful nature, there can also be growth in the divine economy. This would seem to suggest some place for capital investment to achieve that growth, hence an argument that responsible borrowing for investment would have a place in the divine economy. The extent to which that borrowing should be indebtedness acquired by government will depend, to some degree, on the proper role of government.
None of these elements are, in themselves, determinative in establishing a precise Christian view on sovereign debt. The key point of the creation mandates or principles is that economic provision under God reflects both the order of creation initiated by God and the character of God. Hence in deriving principles for government indebtedness, it should be borne in mind that its nature, form or extent could be seen as denying divine purpose and character. The Lord has made provision in the creation for economic activity, including concepts of capital accumulation and growth. Since all are created in the image of God, there is also an element of personal responsibility, as well as responsibility across generations.
2.2 Intergenerational justice and government debt
Government indebtedness involves decisions being taken for taxpayers in one generation to consume today at the expense of future taxpayers.[7] The question is whether this is compatible with reasonable principles of distributive justice. In these matters, the exercise of prudence is important, so the answer will not be straightforward – reasonable people will disagree. In principle however, future generations cannot be ignored when it comes to distributive justice. Pope Paul VI wrote:
We are the heirs of earlier generations, and we reap benefits from the efforts of our contemporaries; we are under obligation to all men. Therefore we cannot disregard the welfare of those who will come after us to increase the human family. The reality of human solidarity brings us not only benefits but also obligations.[8]
In addition, Pope Benedict XVI, answering a question about government debt, warned that we are ‘living in untruth’ when we live at the expense of future generations.[9] In Catholic social teaching, responsibility for the future has been recognised in terms of environmental obligations. We are compelled to ‘recognize our grave duty to hand the earth on to future generations in such a condition that they too can worthily inhabit it and continue to cultivate it’.[10] Yet little has been said about government debt.
Perhaps the first time intergenerational justice was considered systematically in Catholic social teaching was in Laudato si’, Pope Francis’s 2015 encyclical on the environment. A section titled ‘Justice between the generations’ called for intergenerational solidarity, and solidarity can be defined as the ‘firm and persevering determination to commit oneself to the common good’.[11] Francis wrote: ‘What kind of world do we want to leave to those who come after us, to children who are now growing up? This question not only concerns the environment in isolation; the issue cannot be approached piecemeal.’[12] He went on to warn against a culture of instant gratification and in which parents consumed too much, making it more difficult for their children to acquire a home or build the resources for starting a family.
The same principles apply to government debt. A society comfortable with accumulating more government debt – through either profligate spending or unwillingness to tax the current generation to fund such debt – is imposing an unjust burden on future generations of taxpayers as well as living inappropriately. If debt becomes too onerous, governments might renege on repaying. This too would be an injustice to those who, in good faith, have lent them money. Though there might be little sympathy for creditors in such a situation, generalised assumptions can be dangerous: creditors may include beneficiaries of pension funds who rely on them for their income in retirement, or other groups not necessarily well off, at home and overseas.[13]
If the government tries to reduce its debt burden through inflation, this will create other problems but also lead to an arbitrary redistribution of wealth from people with certain types of property – those on fixed incomes, often pensioners, as well as holders of government debt – to the wider body of taxpayers in the economy, both individual and corporate. This is problematic from the perspective of distributive justice.
The principles of distributive justice normally employed in Catholic social thought should raise concern about one generation consuming, systematically, at the expense of future ones, except in specific circumstances. This conclusion should also apply to obligations in respect of future pensions and health-care costs. A generation should not vote itself entitlements without putting aside the necessary resources to provide for the future costs of them, as would happen in private-sector or mutual social-insurance arrangements. To do so puts society at great risk that future economic and demographic changes might mean that resources do not exist to fund the obligations. This in turn has the potential to create conflict between the generations, whereas proper principles of justice should remove it. Such conflict also undermines the common good, so that the principles of social justice and of distributive justice are both compromised.[14]
This does not mean, of course, that there should not be systems of health care and pension provision in old age – but these should largely be funded at the time the promises are made. This can happen in the context of mutual arrangements for workers organised by trades unions, commercial private or government arrangements[15] – or hybrids of these.
However, there might be situations in which it is prudent as well as just for a state to take on debt. First, a society that incurs debt to create conditions that lead to economic prosperity for both the current and future generations can rightly expect the latter to contribute to the cost. This might be the case, for example, when governments fund infrastructure investment, though prudence is required to ensure it will have the expected benefits and not simply promote the interests of specific groups – there is danger in both vanity and ‘white elephant’ infrastructure spending. Second, when a catastrophe hits, such as the current pandemic, and it is prudent for government to bear the economic costs of both treatment and actions to prohibit economic activity temporarily, it is just for the costs to be spread over future generations. However, it could also be argued that governments should accumulate resources – over time, from surpluses – to deal with such events rather than borrow when they happen. Also, should the common good of the whole community come under threat through war, it would be justified to borrow to defend. First, future generations will benefit from the action, if it is a just war. Second, when it is necessary for the survival of society, in the same way that normal principles of property rights can be overridden for the benefit of a destitute person,[16] Catholic social teaching would surely accept that all should do what they can to protect the common good in war, even if future generations bear part of the cost.
This discussion of government debt within the context of Catholic social teaching also reflects the wider Christian tradition. Section 2.1 noted the central importance of intergenerational responsibility, since all of humanity is created in the divine image. There are three important considerations.
First: the principle of dignity across the generations. Human dignity derives from the fact that humanity is created in the image of God (Gen. 1.27), and is an intrinsic part of what it means to be human. Consequently, it is not restricted only to certain generations but applies to all humanity across time. Any actions denying it to one generation to the benefit of another can be seen as denying the character of God, who creates all humanity in his image. So to find a reasonable balance between the generations, government debt requires careful assessment in relation to: the tax burden (revenue may need to be raised to service debt); interest rates and future expectations of them; and the prospects for inflation (which can lead to unjust gains for one generation at the expense of another). There should certainly be some form of working assumption against the excessive accumulation of debt by government.
Second: the principle of individual responsibility. One of the consequences of the creation order – as of the wider teaching of Scripture – is individual responsibility for actions and consequences. The command to work – with all the consequent implications for economic activity – has been understood throughout Christian history as suggesting a degree of personal responsibility to work, and hence for all that flows from it. From the perspective of government debt there remains a proper Christian responsibility for the current generation to: fund the current life and needs of the nation; set aside where necessary for the future; and ensure government spending and associated tax burdens are not excessive. This is, in essence, a responsibility about current consumption that recognises the abundance of God’s provision, alongside the scriptural warnings against debt and excess. It is wrong to borrow and not repay debt (Ps. 37.21: ‘The wicked borrow and do not repay, but the righteous give generously’), because this denies God’s character and implies he is insufficient for our needs – there is a moral responsibility to honour God. And debt consumes and enslaves (Prov. 22.7: ‘The rich rule over the poor, and the borrower is slave to the lender’). Almost everything about debt – worry, deferment of responsibility to others, a sort of bondage to the interest repayments – represents a distortion of responsibilities set out in creation and elsewhere. All these aspects apply as much to government debt as to personal liabilities. Romans 13.8–10, which is a discussion of the responsibilities of citizens towards the state, explicitly states ‘Let no debt remain outstanding, except the continuing debt to love one another’, and grounds this command in the law of the commandments, which are themselves a reflection of the natural law of the creation order.
Third, the principles of the divine economy. The idea that God provides the means of production, the economic capital and the skills or human capital to ensure a functioning market economy has been set out. Due to the fall, there is imperfection in the economy, but the principles from creation still apply: the ability to achieve economic growth (for the benefit of all, both now and in the future); the common good; the responsibility for stewardship of the earth. Within all of that there is concern for ensuring justice and a role for government in the ‘common kingdom’. Excessive borrowing and debt, as a minimum, challenge these principles because they challenge the character of God, the image of God in humanity, and our responsibilities to both this and future generations.
These principles do not mean that governments should never issue bonds in order to borrow. They are, rather, a warning about purpose, balance and intent. It is only possible here to scratch the surface of the subject and perhaps lay some groundwork for further discussion. However, applying the principles of the creation order, Scripture and distributive justice, there is a strong case for governments not to accumulate debt systematically unless the circumstances are exceptional or future generations clearly benefit. As well as being an injustice, such indebtedness might prevent governments undertaking the functions that Catholic social teaching and indeed the wider Christian tradition demand of them. It is to this that the final chapter now turns.
Notes to Chapter 2
[1] John Paul II (1981), Laborem exercens; https://www.vatican.va/content/john-paul-ii/en/encyclicals/documents/hf_jp-ii_enc_14091981_laborem-exercens.html, para. 4.
[2] Dorothy Sayers, Why Work? An Address Delivered at Eastbourne, April 23rd, 1942 (London: Methuen, 1942), p. 18.
[3] Josemaría Escrivá, Friends of God, first published in Spanish in 1977 (first British edition London: Scepter, 1981); https://www.escrivaworks.org/book/friends_of_god.htm, ch. 4, no. 61.
[4] John Calvin, Commentary on Genesis 2.15, quoted in Ian Hart, ‘The Teaching of Luther and Calvin about Ordinary Work: 2. John Calvin (1509–64)’, Evangelical Quarterly 67:2 (1995), pp. 121–35, at pp. 121–2.
[5] Abraham Kuyper, On Business and Economics, ed. Peter S. Heslam, Abraham Kuyper Collected Works in Public Theology (Bellingham, WA: Lexham Press and Acton Institute for the Study of Religion and Liberty), p. xlix.
[6] Pope Paul VI (1967), Populorum progressio; https://www.vatican.va/content/paul-vi/en/encyclicals/documents/hf_p-vi_enc_26031967_populorum.html, para. 25.
[7] It is the holders of government bonds who will reap the corresponding benefit, while they sacrifice current consumption in order to lend to the government.
[8] Populorum progressio, para. 17.
[9] Peter Seewald, Light of the World: The Pope, the Church and the Signs of the Times (San Francisco, CA: Ignatius Press, 2010), pp. 47–8.
[10] Pope Benedict XVI (2009), Caritas in veritate; https://www.vatican.va/content/benedict-xvi/en/encyclicals/documents/hf_ben-xvi_enc_20090629_caritas-in-veritate.html, para. 50.
[11] Pope John Paul II (1987), Sollicitudo rei socialis; https://www.vatican.va/content/john-paul-ii/en/encyclicals/documents/hf_jp-ii_enc_30121987_sollicitudo-rei-socialis.html, para. 38.
[12] Pope Francis (2015), Laudato si’; https://www.vatican.va/content/francesco/en/encyclicals/documents/papa-francesco_20150524_enciclica-laudato-si.html, para. 160.
[13] In the UK, about 40 per cent of all government debt is held by UK insurance companies and pension funds – see https://dmo.gov.uk/media/17379/oct-dec.pdf.
[14] For a discussion of the distinction between these two types of justice, see Philip Booth and Matias Petersen, ‘Catholic Social Teaching and Hayek’s Critique of Social Justice’, Logos: A Journal of Catholic Thought and Culture 23:1 (2020), pp. 36–64.
[15] In the UK, for example, local government pensions are funded and the funds invested, but national government civil-service pensions and general old-age pensions are not. Both are provided by the state.
[16] See Pope Leo XIII (1891), Rerum novarum; https://www.vatican.va/content/leo-xiii/en/encyclicals/documents/hf_l-xiii_enc_15051891_rerum-novarum.html, para. 14. This situation was also discussed by St Thomas Aquinas.