The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of The Challenges of Migration by Andrei Rogobete.

The publication can be downloaded here. Alternatively, paperback copies can be purchased by contacting CEME’s offices via email at: office@theceme.org

A great title from Grant Thornton.

Several hundred people came together to celebrate the vibrancy of London and its economy and to look to the future. The CEO of Grant Thornton, Sacha Romanovitch, introduced the occasion reminding us of the central place the London occupies in the world economy, yet also the challenge of achieving an economic settlement that is inclusive, fair and rewarding for all. In doing so we face challenges of how we grow the economy, how we work in the future and, of course, the challenges we face in living in capital city.

There was a fascinating array of speakers, the proceedings masterfully overseen by Sir Trevor McDonald, from founders of business mentoring networks and advisers to government to key players in the housing sector and even a poet.

The essential celebration was of the diverse talent of London’s people and how that can be put to good business purpose and good social purpose.

Grant Thornton had conducted their own research on the opportunities and challenges of living and working in London and were clear that London’s economy needed to be profitable but that did not mean it should not be purposeful.

Certainly with the generational changes that we have seen and, indeed, in the light of the financial crisis and corporate scandals, it is now axiomatic that business must be purposeful. That does not mean – in the old language of Corporate Social Responsibility – that a company simply sets up a foundation and makes grants to worthwhile charitable causes – though that may still be part of the picture. Rather, it is a point about the fundamental purpose of a company, its aims, methods of operation, sustainability, relationships to employees, community and society. None of that means that profits cannot and should not be made. Even large profits. Even more so, it is a move in the direction of, perhaps, Corporate Social Innovation – how profitable companies purposefully align themselves with social objectives. That might mean thinking about more flexible working arrangements for employees as much as grand statements about social justice. The aim is healthy, purposeful and meaningful companies.

Vibrant Capital sought to think about some of these things with the ideas of live, work, grow. I appreciated this combination; recognising that a vibrant economy will be a growing economy, one that encourages innovation and creativity. Similarly, this leads to questions about the nature of work and how we live. Unsurprisingly, the question of housing arose again and again in the discussions. I will return to that point subsequently.

Three things that I learnt either from speakers, or others, or in discussion and from my own observations:

• – The British economy is better at encouraging start-ups than scale-ups

And here is the complexity. Scale-up requires capital. London is the leading capital market in the world, with New York. Yet access to capital for many companies remains difficult. The future shape of the economy requires a trusted and purposeful financial sector, the ability of firms to access capital, the building of real and indeed local relationships between the providers of capital and SMEs.

• – London attracts real talent across a vast range of sectors which gives the city is vibrancy

The industrial revolution harnessed massive resources of capital, labour, land…..and entrepreneurship. We have always been an innovative, creative nation, attracting real talent and expertise, both home grown and providing opportunities for those from elsewhere. Let’s celebrate this entrepreneurial talent. We have always been a trading nation but we need to do everything possible to mentor and help companies into new markets. There may be a new industrial revolution coming, new patters of work, new ways of doing business – such change will always bring challenges as it did 200 years ago, but we have an opportunity to think about and shape the nature of that economy.

• – New partnerships, public and private sector, companies and communities, cities and citizens will shape the future

I do not think that it is the responsibility of business to solve the housing crisis in London. However, first, business has a fundamental interest in solutions being found to that problem and, second, business talent applied to social need can produce innovative solutions. One speaker said in relation to housing that we need to be willing to try things that fail. More widely the point is how we have come to compartmentalise society – business, family, politics, arts – everything in its own self-contained box or silo. If we really are to seek some solutions to our societal needs, then these silos need to be broken down.

Three challenges.

• – The danger of the echo chamber. If you put 300 business people in a room and ask whether they think business should be responsible and purposeful, the answer will be ‘yes’. And they will mean it. Only a tiny minority of people in business either do or wish to behave in immoral or exploitative ways. The challenge though can be uncomfortable. We need to ensure that we think more precisely about the ethical challenges we face in business. There are questions for financial services, corporate governance and audit sectors. To at least some degree, excessive regulation hinders ethical behaviour rather than encouraging it. How can we permanently change the mainstream culture?
• – Sharing the vibrancy broadly. The diverse and cosmopolitan nature of London and the worldwide talent it attracts, makes it attractive to many of us – but the reality is that view is not shared nationwide. To change that mindset, we need to make sure the vibrancy of London, its economic success and creativity, is not held in, but spread broadly. And not by more redistributive taxation but by empowering the regional economies of the UK.
• – Learning from our history. Too often we think we are doing things for the first time. The UK economy can learn from its industrial past both economically and socially. In the nineteenth century there was a vast range of institutions which developed micro-finance, access to credit, housing initiatives for key workers, the encouragement of saving and so on. We have lost many of these ‘intermediate institutions.’ As we face new business challenges, the future of work, and the challenges of social inclusion we need to realise that we need a new social contract drawing public, private and voluntary sectors together and a new debate on the proper role, but also the proper limits of government.

At CEME we think about these things all the time, seeking to encourage the intellectual and practical debate about how we build a vibrant, enterprising economy, one in which creativity and innovation is rewarded and celebrated, but one also in which all have opportunities and all can flourish. We have events later in the year on Work and also The Future of Capitalism.

Watch this space for the continuing debate.

For now, though, thank you to Grant Thornton.

Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.

The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of Understanding the Common Good, edited by Richard Turnbull.

A copy of the publication can be found here.

Alternatively, please contact CEME’s offices for hardcopies via email at: office@theceme.org

By most accounts the biggest business story of the week was Facebook’s Senate Enquiry on the issue of privacy and internal practices.  I will keep things brief, but I do believe that there are some highlights and concluding thoughts that can be made from the ten-hour, two-day affair.

For the most part, it was smooth sailing for Facebook’s founder and CEO, Mark Zuckerberg as the generational gap became increasingly self-evident. Many of the Senator’s questions were so crude that most millennials could have taken Zuckerberg’s seat and handled them with relative ease. From the fundamentals of Facebook to how social media works in general, it became clear that this is an area completely foreign to them.

In several situations Mr Zuckerberg was so baffled by the questions that it made him unsure whether they were hiding a deeper meaning, or they were that simplistic.  For the most part, it was the latter. I remember being amused as one senator asked, “How can Facebook sustain a business when it does not charge its users for its service?”. To which an awestruck Zuckerberg responds, “Senator, we run ads”.

Such a basic lack of understanding is difficult to justify. The whole point of the inquiry was privacy and advertising. Surely the senators must have had some form of elementary briefing on Facebook beforehand. The problem however is deeper, it’s not just a lack of knowledge but rather a lack of understanding. I wouldn’t blame the senators but the generational gap: it can be difficult to understand Facebook or social media if you have never used it. This does raise serious questions about the quality of policy development in this field.

There were however senators that did indeed corner Mr Zuckerberg on some questionable practices at Facebook. Sen. Ted Cruz pushed on the suspected political bias of Facebook against conservatives. Zuckerberg admitted, “…Silicon Valley is an extremely left-leaning place. This is a concern that I have and that I try to root out of the company – is making sure that we don’t have any political bias in the work that we do.”

Yet perhaps the most effective line of questioning came from Rep. Ben Lujan who grilled Zuckerberg on the question of Facebook’s data-collection from non-users, also known as ‘shadow profiles’. Zuckerberg defended the firm’s actions as preventative measures “for security purposes”. I know this is a stretch, but I cannot help myself in drawing the analogy with so many authoritarian regimes of the past that have also used “various measures” – all in the name of “security”.

So what is the bottom line on Facebook and privacy?

Social media is here and is here to stay. Apple’s co-founder Steve Wozniack kicked up a great fuss in the wake of the Cambridge Analytica scandal and famously declared that he closed his Facebook account. My gut feeling is that the number of people that will follow suit is minimal. For the most part, users are content with sharing some of their data in exchange for a service.

Don’t think that I am just defending Facebook because I am not. Grave mistakes have been made with users’ personal data and this needs to be rectified. However, I wouldn’t lay the blame on Facebook, the social media ecosystem is the main issue here.

Yet the problem is simple: we do not have a comprehensive framework for the handling and management of private data. The industry is too young for both the users and more importantly, the policymakers to fully understand. That’s why I wouldn’t place the blame solely on Facebook. If it wasn’t Facebook, it would be company X, Y, or Z. We are not just faced with a company problem but an industry problem.

The death toll in the early stages of the auto industry was staggering. Road and safety infrastructure was effectively nonexistent because no one really understood what a motorised vehicle implies – the previous generation didn’t have cars. We are at this stage with privacy and social media.

For now, three things need to change: 1. It is up to the consumers voice their demands on privacy issues. 2. Policymakers need a far better grasp of social media and the online ecosystem. 3. Companies like Facebook need to be clearer (from a legal and user interface perspective) on how they intend to use data.

Once this triangle aligns, privacy issues will become nothing more than growth pains of a young but nascent industry.

Andrei Rogobete is a Research Fellow with the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.

The Centre for Enterprise, Markets and Ethics (CEME) is delighted to announce the publication of Making Capitalism Work for Everyone – Vol. 1 & 2, edited by Richard Turnbull and Tim Weinhold.

Volume 1 can be downloaded here and Volume 2 here. Alternatively, you can order paperback copies via contacting CEME’s offices at: office@theceme.org

I write in defence of Her Majesty’s Customs and Revenue!

Intellectually I believe in tax incentives, a low tax economy, flexibility and so on. These, however, are matters of debate and policy upon which individuals may legitimately differ. Once a policy is set it is surely both reasonable and moral that the law is consistently applied.

Enter the case of the BBC presenters.

Christa Ackroyd was a regional BBC presenter contracted through a personal service company. Ms Ackroyd lost a case in the First Tier Tribunal (which hears tax appeals) on her employment status with the BBC. Her Majesty’s Customs and Revenue (HMRC) were seeking to recover tax and national insurance from the company through which Christa Ackroyd was contracted via a mechanism known as IR35 – the essence of the argument being that to all intents and purposes she was an employee of the BBC and should be taxed as an employee rather than an independent contractor.

The full judgement was released on 10^th February 2018 and can be read here.

Ackroyd was under contract for 225 days a year to the BBC and the contract, which covered 7 years, could be ended only by ‘material breach.’ She was restricted from working elsewhere without permission and her company could not provide a substitute for Ackroyd. The Tribunal ruled that she was economically dependent on this contract (in fact it seems that between 95% and 100% of her income derived from this contract) and its’ nature was that of a contract of employment. This was in essence stable and continuous employment, not a series of short-term contracts.

The presenters are now up in arms. Firstly, they protest that the BBC forced them to take this stance and contract through personal service companies and secondly, that the BBC is now inserting clauses into contractual arrangements transferring the entire risk for any potential tax liability to the individual. Many, say the presenters, are now working ‘out of contract’ and could therefore be released from their posts with minimal notice.

Both parties are being disingenuous.

First, in principle, HMRC are surely correct. If a presenter was a genuine freelancer, presenting programmes for different companies in different places on a relatively short-term basis then there is a real case for that individual to be considered self-employed whether individually or via a personal service company. However, if that presenter works nearly exclusively for the BBC (both in time and economically), and has, say, presented the same programme for many years, it is difficult to see how that can be reasonably justified.

Second, both parties have benefited from these arrangements. If a contractor operating through a service company agrees a deal with a client then the fees are almost certainly going to be higher than if the person is employed. This is because the main saving in these arrangements is 13.8% employers’ national insurance. Self-employment or contracting deals usually share the benefit; so the BBC pays less than 113.8% of ‘base salary’ and the presenter receives more than 100% of ‘base salary’. Strange that doesn’t get mentioned.

The benefits accruing to the presenter do not stop there. The second real benefit is what can be claimed as expenses payable from pre-tax rather than post-tax income. In particular the presenters – if self-employed contractors – will be able to claim their travel commuting costs (whether from Macclesfield to Salford, or even London to Salford). That is because a genuinely self-employed contractor will be travelling from place to place, from job to job, so it is entirely reasonable for such costs to be tax deductible. However, a commute from home to the same place of work is not tax allowable for the rest of us.

I do not know whether any of the presenters employ spouses, partners or family members to administer their companies, do the accounts, make the tea etc. However, I strongly suspect that some will do exactly that. Hence more income can be paid into the household at standard rather than higher rates of tax. Payment by dividends may also lead to some further savings on national insurance.

Third, by refusing normal employment contracts, and with the presenters resisting, the situation appears to be that the BBC are employing presenters without contracts. There is no difference in substance here from a zero hours contract – the sort that the BBC condemns in its investigative journalism of, for example, Sports Direct. The fact that their presenters have some 000’s on the end of their salaries/fees does not change the principle. The BBC could offer ‘employment contracts’ if it chose to do so and there is a sniff of hypocrisy when they expose others who do not do so and then fail to act properly themselves.

Why does it matter?

For two reasons.

First, the reputation of the market economy. An innovative, enterprise, capitalist economy requires a good deal of freedom of action and organisation. However, if participants in the economy – whether corporate or individual – act immorally the damage is to the whole system of democratic, market-based capitalism. What do I mean by acting immorally in this case? What about holding oneself out as an independent, self-employed contractor (in the case of the presenters) or requiring your presenters to do so (in the case of the BBC) when in reality the arrangement is one of employment as indicated in the judgement.

Second, the importance of incentivising the genuinely self-employed. Small, self-employed businesses are the life-blood of our economy. They provide opportunity, employment, freedom and income. Self-employment is one way in which motivated individuals express their aspirations to be successful and grow businesses. They take risks that others would not and do not and their entitlements to various employment or welfare rights are less than with employees. Hence it is right and responsible that those in that position receive at least some degree of favourable tax treatment. For these arrangements to be either abused or blurred will ultimately be damaging to those whom the system is genuinely designed to assist.

By muddying the waters, the BBC and its well-paid presenters, may be damaging not only our economy and its basis, but the genuinely, hard-working, striving self-employed.

Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.

I have to begin by declaring something of an interest. Before becoming a priest in the Church of England I was an entrepreneur and writer of business books. For the majority of the time I ran my brand agency I was a non-Christian. Looking back, I think we managed to be a highly ethical business with no direct input from Christian sources. At one point I hired an ex-priest who came to work for us. I remember him saying that we were far more ethical than any Christian organisation that he had ever worked for. In fact he said that we were the most Christian place he had ever worked.

So you’ll probably realise why I have a few problems with this book by Goossen and Stevens, who at times seem to make a claim for the moral high ground for especially Christian entrepreneurial leaders.

But let’s begin at the beginning. This is certainly an admirable enterprise and it sets out to ask and answer some pertinent questions. Are entrepreneurs born, not made? What difference does a Christian faith make to being an entrepreneur? Where does leadership come from?

The book begins with some interesting section on what entrepreneurialism is – what is its essence. This is clearly an important issue for the church. There is perhaps an inherent dualism whereby church is seen as a place of holiness and work a place of toil and compromise. The authors are keen to help us torpedo this.

The authors are persuasive in their conviction that entrepreneurialism is a process more than a genetic or societal disposition. This is liberating and helps us see that we all have the ability to innovate and embrace change. They draw on the work of that great hero of modern management, Peter Drucker who argues that there is no such thing as an entrepreneurial personality. The authors suggest there are five tenets that make up the essence of entrepreneurship – innovation, seizing opportunities, enjoying it, doing risk analysis and developing good habits.

The book is interesting in its dissection of what makes a leader and the particular challenges of being a Christian leader. This is especially true when we begin to grapple with what it is to be a servant leader. There could have been much more on this – perhaps a whole book.

Goossen and Stevens move onto the thorny issue of what exactly is the difference between the Christian entrepreneurial leader and the secular one. This had me gripped and although I didn’t agree with it all, it is a discussion that needs having. The authors highlight a major difference between the two categories in terms of worldview. Thinking back to my time as a non-Christian entrepreneur, that does hold water.

The authors suggest that the worldly entrepreneur tends to spin a narrative of self-making, eliminates God from the equation and does it mainly for self-fulfilment. I wonder if this is just too partial. Many non-Christian entrepreneurs I know are driven by far more complicated and also altruistic motives for their work. It is so easy to sound self-righteous. The authors position the Christian entrepreneur thus. They,credit God, they look to their faith for ethical anchors (the ten Commandments come in handy), and they develop spiritual gifts in themselves and others for the glory of God.

The book covers much important ground. It looks at how being a Christian adds meaning and purpose the work. It gives a blueprint for how to put practical Christian entrepreneurial leadership to work. And this is perhaps the most useful and cogent part of the book. This is no trot through the Bible it is a programme for how to become the leader God wants you to become. It is in these chapters that we begin to get a sense of the author’s passion and deep scholarship.

I have a few minor quibbles. The points for reflection and discussion are a little twee and seem grafted on. But this is the case for many Christian books that try to cram a bit of interaction and perhaps to open up their market to home groups and other discussion groups.

What does work well is the tone. The book is beautifully written by people who thought long and hard and prayed about it. There could have been more about being an entrepreneur in church perhaps, but the authors are on the money when they describe the world of work and commerce as the great mission field and testing ground. You have only to spend a few hours in the City of London at rush hour and see the tens of thousands of people going to work or returning from it to wish that we had more engagement here.

The City is steaming on, the world is moving apace and we can’t afford to be stuck in churches while ignoring the great opportunities that are out there.

This book will encourage people to see their calling and to go for it. In that it is positive. I would have liked to see more credit given to non-Christian entrepreneurs but probably that’s just me being fussy. Entrepreneurialism can be Godly. Thank God for that.

“Entrepreneurial Leadership” by Richard j. Goossen and R. Paul Stevens was published in 2013 by IVP USA (ISBN-10;0830837731). 185pp.

Steve Morris is the parish priest at St Cuthbert’s North Wembley. In earlier days he ran a brand agency, worked as a journalist and wrote books about management.

It looks like this winter has not only brought us some harsh weather, but also a harsh reality check for the consumer industry.

On Wednesday 28^th February 2018 ‘Toys R Us’ UK collapsed into insolvency, leaving over 100-based UK stores facing foreclosure and over 3,000 staff with a big question mark over their employment. Maplin is also following in its footsteps with over 200 stores and some 2,300 jobs at risk.

Yet this all feels a bit Deja-vu.

Last year we have seen the fall of two high street giants, HMV and BHS. And the picture is not looking much brighter for any of the other major retailers. Prezzo, the Italian restaurant chain and clothing retailer New Look have both committed to “major restructuring” that could further result in the loss of thousands of jobs. Research conducted by Deloitte found that over 100 UK retailers went bust in 2017, a 28% increase over the previous year.

Looking back at Toys R Us – what happened? Has the digitalisation of the toy market been so dramatic that their business model simply didn’t stand a chance of survival? Was Toys R Us too slow in adapting to this new environment? Did the company suffer from poor internal decision-making?

As with most cases like this – the answer probably lies somewhere in the middle.

There is no doubt that the arrival of online retailers like Amazon and Ebay has had a dramatic impact on the profitability of stores like Toys R Us. A business with physical, customer-facing stores simply cannot compete on price with one that in effect, only needs a distribution warehouse. Amazon and Toys R Us are not on a level playing field – the overheads of one can never be matched by the other. As a result, the boom in online toy sales has been nothing short of remarkable. If in 2005 total sales accounted for approx. $2.5 bn, by 2016 they reached $12 bn – almost a 500% increase.

Diane Wehrle, Director of Springboard Consulting, said that digitisation is fundamentally transforming the high street. It will become as much about socialising as it is about shopping, “There’ll be more coffee available in a fashion shop than there is now […] There may be work areas, […] having pods or workstations on the High Street could be an opportunity for some retailers. We’re going to see these collaborations”.

So the industry is rapidly changing – but a brief look over the financial accounts of Toys R Us should set off alarm bells for most analysts and accountants.

The beginning of the end really started in September 2017 when the US arm of Toys R Us filed for Chapter 11 bankruptcy. The company initially grew out of a small furniture business for children. Founder, Charles Lazarus found that selling toys instead of furniture was far more profitable and in 1957 officially established Toys R Us. The company experienced terrific growth over the decades and established itself as one of the global leaders in toy sales.

It floated on the stock exchange until 2005 when via a leveraged buyout (LBO), a consortium of investors took control of the company. This cost over $6.6 bn and increased the company’s total debt from just over $1 bn in 2004 to over $5 bn in 2005. We can talk about the benefits and risks of LBOs another time but as a general rule, LBOs only work as long as there is a positive, steady cash flow.

Unfortunately for Toys R Us this was the perfect storm. A rapidly changing industry and insurmountable debts gave it little chance of survival.

A part of me feels saddened and rather nostalgic. One of the clearest memories from my early childhood was when my father took me on a surprise trip to Toys R Us for my birthday. I got the white sword from the Power Rangers. The excitement and pure joy I experienced of walking into that Toys R Us can never be replicated through a computer screen. It is probably one of the reasons why this memory remains so clear in my mind despite two decades going by.

Toy stores are becoming a boutique experience for the upper echelons of the market. Parents that want their kids to have the experience must both have the time and willingness to pay the price premium. My gut feeling is that the click of a mouse is the only experience most children will ever have.

Hopefully I am proven wrong.

Andrei Rogobete is a Research Fellow with the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.

The Poverty of Nations comes with enthusiastic endorsements: Robert Sirico says that “The table of contents alone provides clearer instruction than many graduate students get in economics courses” and Rick Warren asserts that “It should be required reading in every Christian college and seminary, by every relief and mission organisation, and by every local church pastor”. The authors have high ambitions: they state that their goal “Is to provide a sustainable solution to poverty in the poor nations of the world” (page 25) and that their “primary audience” is Christian leaders in poor nations (page 31), and they hope that Christians in more prosperous nations will also read the book. Readers, therefore, start with great expectations. Unfortunately, however, many will end up disappointed. Although the underlying thesis is sound and the book contains sensible analysis, it suffers from serious deficiencies.

Wayne Grudem is a well known theologian and Barry Asmus an equally well known economist.  Both are committed Christians and are at pains to stress that financial well-being is not the ultimate goal in life. Indeed, this may be the only economics book that contains a call to trust in Jesus Christ (page 41). Nonetheless, the book’s subject is material well-being. The authors suggest that, once the fundamentals are understood, “it becomes evident that if we want to solve poverty, the correct goal is that a nation continually produces more goods and services per person each year” (page 45). They passionately believe that the best (perhaps, only) mechanism for achieving this is the free market but they also emphasise that “the right kind of economic system does not by itself bring a nation out of poverty” (page 107). They discuss the importance of political and legal systems (especially the rule of law, property rights, the absence of corruption and the provision of adequate education and healthcare), various different kinds of freedom (including freedom of movement and of establishment and freedom from excessive regulation) and core political values (i.e. cultural attitudes and norms).

The authors place the responsibility for pulling a nation out of poverty firmly with the nation’s own leaders. They recognise that wealthy nations have a part to play (e.g. by lowering trade barriers and stopping “commodity dumping”); they accept that limited, targeted use of foreign aid may be appropriate (although they repeat the well rehearsed arguments against its widespread use); and they recognise that some of the blame for Third World poverty rests with more wealthy nations. However, they conclude that “even if external factors or entities have had some negative effect in poor nations, they are still secondary causes of poverty today, not primary causes” (page 83). The poor are not poor because the rich are rich.

The authors recognise that what they are saying is not new. In particular, they owe a huge debt to David Landes, quoting “The Wealth and Poverty of Nations” several dozen times (perhaps, excessively). Nonetheless, it is good to see the core arguments for a free market system clearly re-asserted and the chapter on its moral advantages is particularly welcome. The authors defend the system against all comers and suggest that, even in relation to the evils of selfishness and materialism, it is better than the other options. Conversely, they attack these other options, quoting with approval Claire Berlinski’s summary of Margaret Thatcher’s view that “socialism was not a fine idea that had been misapplied, it was an inherently wicked idea” (page 198).

There are also shorter but nonetheless interesting discussions of the dangers of governments becoming monopoly purchasers and the moral issues associated with “wants” (i.e. desires), which the authors suggest should not be equated with greed but rather regarded as “a good thing, part of God’s original creation” (page 218). This leads to the conclusion that “it is important for people to think of an “ideal” life as one of joyful production that benefits both themselves and others” (page 345).

So what is wrong with the book? First, it tries to deal with too many different issues. It contains no less than 79 different recommendations and the result is that the second half of the book at times feels like a list. Many of the points overlap (which results in repetition) and some are not properly argued or developed. For example, the brief discussion of need for religious freedom fails to show how it connects with economic growth, whilst the discussion relating to the family (including sexuality in general) is shallow.

In principle, the idea of bringing together a theologian and economist is a good one, allowing the economic analysis to be firmly grounded in theological and ethical considerations. However, in practice, the result is that neither the economic nor the theological arguments are properly developed. In particular, some of the biblical analysis is disappointingly superficial and contentious. For example, Grudem argues that the Bible sees the role of government as being essentially limited but fails to explain why it is that the authors favour universal compulsory government provided education (which many Christians until the 20^th century would have strongly opposed).

The authors place great weight on the Biblical command to “Be fruitful and multiply and fill the earth and subdue it” (Genesis 1:28, which they quote a dozen times). This is a good starting point for a Christian view of economics but the authors place a weight on it that it cannot bear. In particular, it underlies their comments relating to the need to secure “freedom to utilise energy resources” (page 283) and other comments relating to the environment, some of which are highly contentious yet asserted in strident terms. This is a pity because (as Landes has pointed out), the Judeo-Christian subordination of nature to man has been important to economic development and there is a dangerous element of pagan animism underlying parts of the ecological movement today.

The statement that society needs to believe “that the earth’s resources will never be exhausted” (page 339) is another example of the same issue. There is a respectable case for this belief and it is important to challenge at the doom mongers who for two centuries have been constantly warning of catastrophe caused by excessive resource utilisation. However, the single page that the authors devote to this subject results in their claim appearing as an a priori belief rather than a carefully thought through conclusion.

More generally, despite the acknowledgement that the free market system is not perfect (page 207), the book contains little in the way of balanced critique of it and it is disappointing that, after some very good analysis and foundation laying in the first two-thirds of the book, the final third leaves one with the impression that the authors are inviting poorer countries to adopt the U.S. system wholesale, including things such as the right to bear arms (page 232) and the U.S. concept of patriotism (page 359), which do not appear to have much to do with economic development.

These are serious defects. They are likely to alienate many readers and fail to persuade others who might be open in principle to persuasion, including the Third World leaders who the authors claim are their target audience. Furthermore, those wanting detailed historic economic analysis would be better off with The Wealth and Poverty of Nations. Nonetheless, there is enough that is good within the book to make it worth reading and it might also be useful as a book to be critically discussed in the Christian colleges, seminaries, relief and mission organisations and churches to whom Rick Warren has recommended it.

“The Poverty of Nations: A Sustainable Solution” was published in 2013 by Crossway (ISBN: 978-1-4335-3911-4). 373pp (excluding bibliography).

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.