This is a transcript of a lecture given at Hope College (MI. USA) in March 2020.
Well, good evening and thank you very much indeed for the invitation to speak this evening at Hope College. It is a privilege to do so. I come to you with a varied background and training, including economics and theology. I have both worked in the City of London and been the President of a Christian seminary at Oxford University. I have also written a biography of a leading Christian social reformer, Lord Shaftesbury. I am currently the Director of a think-tank called the Centre for Enterprise, Markets and Ethics and a visiting Professor at St Mary’s University, London. I take it as read that there is a solemn moral obligation for people of faith to care for the less fortunate, to demonstrate a compassionate generosity towards the poor. We have an indisputable responsibility.
Jesus’ statement, then, in Matthew 26:11, that ‘the poor you will always have with you’ is rather disconcerting. This saying of Jesus seems to have become either a launchpad for utopian schemes of poverty eradication usually involving redistributive taxation and government intervention or a mood of thankful resignation that because Christ uttered these words we have no responsibility.
What I want to explore with you this evening is the moral case for the market. To what extent does the market provide the means and mechanism for achieving the common good, contributing to human flourishing and creativity and at the same time providing the means for the relief of poverty? What are the moral limits of the market and how have Christians responded to this challenge?
The role of markets
The role of the market is contested territory.
Jeffrey Tucker describes the market as generating order and achieving the common good and goes on to describe the market as:
‘…the greatest force for achieving the common good: it is a moral teacher, it is humane, it is socially directed and future orientated in a way that no political institution, socialist or democratic, can ever be.’
A bold claim. Similarly, Michael Novak has argued as follows:
‘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.’
He goes on to define democratic capitalism as one essential defined by a market economy and a free society. Economic liberty and political liberty are closely related.
According to the United Nations, in their 2015 report on the Millennium Development Goals, between 1990 and 2015 the number of people in the developing world living on less than $1.25 per day fell from 47% to 14%. That is a startling change. In the period 2000 to 2015 the percentage of those gaining access to primary education in those regions rose from 83% to 91%.
To give a further example closer to home. I understand that Michigan, or at least registered Democratic Party electors, voted yesterday to choose between a 78 year-old Senator and a 77 year-old former Vice President, having seen off a 78 year-old former Mayor of New York and a mere 70 year-old Senator from Massachusetts in order to take on a 73 year-old incumbent President. According to the US Center for Disease Control and Prevention (CDC), life expectancy in the US rose from 68.2 years in 1950 to 78.7 years in 2018. Over a similar period GDP per head in constant dollars has risen nealy 2.5 times. Rising wealth leads to improved health care and increased life expectancy.
It is difficult to contest that without the market economy we would have made significantly less progress in the fight against poverty, made less progress in terms of health, education and life expectancy and we would be living in societies that were substantially less free.
However, not all are persuaded. The British academic and former Labour Party politician, David Marquand, in his book, Mammon’s Kingdom: An Essay on Britain Now (2015) comments:
‘Today’s markets are constituted by States, sustained by states, protected by states and sometimes imposed by states…without the state’s laws, police officers, courts, prisons, patents, Fraud Offices, food and drug regulations, air safety controls and rules forbidding insider trading there would be no markets…the doctrines that legitimize untamed capitalism tell us virtually nothing about the way in which it works.’
There are plenty of others who see the market as the problem, rather than the solution. And of course, we recognise that there is a proper debate to be had about the distribution of the benefits of the market.
What about public opinion? 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, 44% of Americans agreed that capitalism encouraged personal responsibility and generated wealth, whilst 48% cited just two reasons why capitalism was, in their view, 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.’ This in itself raises all sorts of questions about freedom, taxation, the family and so on.
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 there is a clear moral case for the market, but that the creation of wealth also carries awesome responsibilities. Only when we have had this discussion can we effectively debate how social justice is to be met, the appropriate role of government and, of course, of the intermediate institutions of civil society.
How markets contribute to the common good
From a Christian perspective the idea of the common good is an intuitively appealing concept. It resonates with the teaching of Jesus (“love your neighbour as yourself”, Mark 12:31), St Paul (“let us do good to everyone”, Gal 6:10) and the Old Testament (“seek the welfare of the city”, Jer 29:7). Yet the idea is also tantalizingly elusive. The definitions of common good from within Roman Catholic social thought emphasise fulfilment and flourishing. If the common good is at all about human flourishing, then the economy has a central role to play.
Adam Smith and the common good
Before spelling out in more detail the moral benefits of the market we need to deal first of all with the paradox of Adam Smith. Understanding Adam Smith is an essential building block and he is very often misunderstood.
Adam Smith was born in a town called Kirkcaldy, 10 miles north of Edinburgh in 1723 and died in 1790. He mother was deeply religious, his father a customs officer, who died shortly before his birth. By 1750 Smith was lecturing in philosophy. Adam Smith is most well-known for his publication in 1776, entitled, An Inquiry into the Nature and Causes of the Wealth of Nations. Smith viewed the market as an ‘obvious and simple system of liberty’ (WN IV.ix.51) and that the creation of a prosperous civil society depended upon economic liberty and viewed government interventions as unnatural and oppressive. Smith offers us three lessons. First, he distinguished self-interest from selfishness. The Smithian argument is that the pursuit of an enlightened self-interest brings about not only the satisfaction of one’s own needs but also those of others and indeed the welfare of all. In this way a greater public good is achieved. That is very different from selfishness. Second, in his prior work to the Wealth of Nations, The Theory of Moral Sentiments published in 1759, Smith sets out a moral framework which sees sympathy as a moral principle and implants compassion for others in the human heart. The third lesson is that Smith viewed the role of government as necessary but limited and viewed excessive regulation and the existence of monopoly, whether public or private, as detrimental to the very economic activity necessary for the public good.
In Smithian thought then there is no paradox; the pursuit of self-interest alongside a natural propensity to barter does indeed lead to the common good. Social welfare is dealt with primarily through the moral sentiments implanted in the heart rather than by government. We will turn to that subsequently.
How then might we articulate a moral argument for the market.
First moral argument: enables human creativity
The first moral argument is that markets enable human qualities such as creativity, innovation, enterprise and risk-taking to flourish. The case for the market is not purely economic. Markets are part of a political and social order in which liberty is valued. It is essential to any idea of human dignity that human creativity and innovation can be enabled to flourish. That is precisely what a market mechanism achieves for the good of all. Smith’s natural propensity to barter, ‘the propensity to truck, barter and exchange one thing for another’ (WN 1.ii) such, as he put it, ‘that every man… becomes in some measure a merchant,’ (WN 1.iv), the desire for improvement, the place of enterprise and work all point to an imperative for wealth creation.
Consequently, freedom in economic life is an essential condition for the common good. Within the Judaeo-Christian tradition the human person is created imagio dei, possessed of infinite dignity, with the capacity to be creative, enterprising and innovative but at the same time responsible and accountable. We read in the book of Genesis of the imperative of enterprise and work, reflecting that essential divine dignity in the human person. People cannot realise their full development in a political and economic order which deprives them of freedom including economic freedom. When people are denied freedom human flourishing will wither. So will economic prosperity. We see that in command economics and socialist states.
Second moral argument: brings diverse interests together
The second moral argument for the market is that markets bring together the diverse interests of buyers and sellers, in a voluntary way, and to the benefit of all. Brian Griffiths, an economist and Christian commentator who worked in Margaret Thatcher’s government, takes as an example, a Farmers’ Market. Let me read his description. ‘Each participant in the market will have their own personal interests. Some may be shopping for the best price. Others will be prepared to pay a premium for a quality product. Some may value local convenience more than greater choice. Certain stalls may be promoting new products, others selling old favourites. Some products may be home grown, others imported from different continents. Some may be of the finest quality, others the essential basics. The important point is that markets are successful not because those who buy and sell have common objectives but because they are able to coordinate the different preferences of all concerned without central direction. A farmers market may be a simple structure but the basic principle of coordination is something which applies to all markets.’
Third moral argument: responsive to changing needs
The third moral argument is that markets promote the common good by encouraging suppliers to anticipate, respond and adapt to changing needs. Clothes shops respond to changing seasons. Food shops respond to new dietary standards and also consumer preferences. Financial markets developed derivative products to hedge uncertainty. Technology firms anticipated the demand for tablets, iphones and smart phones. The market and its pricing ensures consumers are served and suppliers are flexible and responsive. Firms which fail to respond in this way will invariably decline, fail or be acquired by others.
Fourth moral argument: result in lower prices and stimulate innovation
The fourth moral argument for the market is that competitive markets are favourable to the common good because they result in the lowest prices and stimulate innovation. The common perception is that competition produces aggression, rivalry, conflict, cheating and discrimination all of which are anathema to a Christian conscience. However, in a competititve market firms have to set prices and respond to market movements and the actions of other firms. Entrepreneurs innovate and compete for customers. Hence the fewer the barriers to entry, the greater the benefits of competition. Applying this to an historical example in England. Around 1845 there was, in the light of a potato famine and issues of poverty, a debate around tariffs on corn (which protected the incomes of the farmer) or removal such tariffs (which resulted in cheaper bread). The abolition of the Corn Laws is an example of a market responding to human need.
When markets fail?
So four moral arguments in support of the market as part of the divine provision to create wealth, produce goods and services, generate work, and dignify human beings. The case is a strong one but that does not disguise either the reality of market failure or the complexities of the challenge of poverty. Markets fail of course for may reasons, ranging from uncosted externalities (eg environmental pollution; how to price and who pays) to the growth of monopoly or at least oligopolistic power. There is also a moral argument about the limits of markets. Michael Sandell refers to an era of market triumphalism where everything is for sale, and markets expanding into areas of life they do not belong. Society makes certain political and moral choices that certain things should not be bought and sold on markets; human organs, human beings, drugs of one type of another and so on. This discussion is probably beyond what we can cover this evening.
The response to poverty: government intervention or the voluntary principle
How then should the market and, indeed, society, respond to the continued existence of poverty? Jesus’ statement about the poor always being with us is a reminder of our responsibility. A moral view of the market and its response to poverty will have a healthy scepticism of the role of government – there is government failure as well as market failure. Mostly, and certainly historically, it is what is known as the voluntary principle which has shaped the response to poverty. Market failure, government failure and the impact of sin all point to the problem of poverty. Let me conclude this lecture with two examples of the voluntary principle.
The first is that of Thomas Chalmers (1780-1847). Chalmers invested Smith’s invisible hand with divinity.The market, Chalmers said, ‘strongly bespeaks a higher agent, by whose transcendental wisdom it is that all is made to conspire so harmoniously and to terminate so beneficially.’ And, the ‘greatest economic good…is obtained by the spontaneous play and busy competition of a thousand wills.’ He also developed the law of relative affection, following Smith’s moral sentiments, that a natural seed was implanted in humanity that gave the individual compassion for the distress and destitution of others.
Chalmers too was sceptical of government. 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.’ Compulsion would remove goodwill from the heart. The intervention of the state led to duties being replaced by rights, to dependency rather than freedom.
The response to poverty then was put into practice through the idea of the voluntary society, an intermediate institution sitting between the individual and governemt. 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. These organisations were neither new nor exclusive to the nineteenth century but there was then a significant expansion. They were characterised by local control and independence from state aid. Social welfare was kept separate from the state. The local voluntary visitor would understand when people needed and deserved help which has always intended to be temporary rather than enshrined in law.
Although Chalmers himself sought to implement a voluntary welfare system when he was the minister of St John’s parish in Glasgow in the period 1819-1823 the example we will look at comes from the following century.
The seventh Earl of Shaftesbury (1801-1885) is the example par excellence of a Christian social reformer, who certainly did not exclude a role for government in legislating against the extremes of social evil but was high sceptical of government’s role to really effect social change and social welfare on the ground. Rather Christian people coming together in societies and associations was the answer – the voluntary principle in action. The whole story is in the book; we will look at just one example, education.
Shaftesbury led a Christian initiative in London to bring education to the poorest in London through the founding and staffing of what were known as ‘ragged schools.’ The aim of the Ragged School Union, founded in 1844, with Shaftesbury as President, was ‘removing every ragged, destitute child from our streets, and to the placing of that child in the path of industry and virtue.’ Note the emphasis on ‘industry and virtue’ – the aim was economic, moral and social transformation. One example of how this was put into practice was for these schools to employ tailors, shoemakers or other craftsmen as teachers of their trade to the children of the poor. The development of the Shoeblacks Brigade was another example; older children employed to clean shoes. The income was divided three ways, a third to cover expenses, a third as wages, a third banked as savings. Note the encouragement of responsibility and thrift. Many voluntary societies were linked to these schools, Penny Banks to encourage saving, Barrow Clubs to provide cheap loans for small businesses. Learning, discipline and thrift would equip them for a better life; a life he always hoped would be dependant in a personal way upon God. Given this you will not be surprised at Shaftesbury’s opposition to the introduction of compulsory state education in 1870. He viewed the prospects of state intervention as disastrous and would be highly destructive to the voluntary Christian school, as indeed, it was. For Shaftesbury and others like him, however, the voluntary society was essentially local and relational, neither of which could be said of government interventions.
The case we have sought to argue is that markets make a contribution to the common good. They have a moral purpose. Not least in the light of Jesus’ words that the poor you will always have with you. In the Christian worldview a competitive market economy can be seen as part of the divine provision for wealth creation and a view of the human person as enterprising, creative, innovative and purposeful, but also possessing the moral sentiments of sympathy and compassion. That is the driving force behind the voluntary principle in social welfare. Markets succeed because they co-ordinate the diverse interests and demands of people, something no command economy could do. Markets though depend upon trust and integrity. Is there a role for government? Of course, but we should maintain a healthy scepticism about its efficacy. Perhaps we should rebalance the approach.
Revd Dr Richard Turnbull
 Jeffrey Tucker, Markets as Extended Communities, in Samuel Gregg (ed), Theologian and Philosopher of Liberty: Essays of Evaluation and Criticism in Honor of Michael Novak, Grand Rapids, MI: Acton Institute, 2014, p21
 M. Novak, The Spirit of Democratic Capitalism, p13
 David Marquand, Mammon’s Kingdom: An Essay on Britain Now, p81
 Pope Benedict XVI, Caritas in Veritate, p49
 Brian Griffiths, Markets and the Common Good, in N. Sagovsky & P. McGrail (eds), Together for the Common Good, London, SCM, 2015, p144
 Michael Sandell, What Money Can’t Buy
 Ibid., page 137
 Chalmers, Natural Theology, volume 188.8.131.52, in Works, page 128
 RSU, Second Annual Report, 1846, page 35