Peter Selby’s polemic against modern money, An Idol Unmasked, was published a few years ago now, in 2014, but captures an attitude to money and modern finance that remains widely prevalent. It is, as he says, a book ‘about money, what it has become, and what it represents in our lives’ (page 3). His key claim, expressed repeatedly throughout the book, is that money has acquired the characteristics of an idol. It now rules peoples’ lives in a way it never quite did before. ‘The quite widely held view,’ he says, ‘that money is not in itself harmful, only the love of it or greed for it, is turning out to be out of date’ (page 3). Over two of the main chapters, Selby links this claim to the decreasing sovereignty of nation states over money, and the increasing role of global financial institutions in the creation and movement of money. More than that: ‘money has long since passed from the control of the public authorities and has become itself the major controlling force behind the organisation of society’ (page 30). Having identified the idol of money and its power over us, he then turns in the final chapters of the book to some theological reflection.
One immediately obvious flaw with Peter Selby’s claim to have unmasked the idol of money (expressed, for example, in the title of the book) is the inconvenient truth that associating money with idolatry is hardly a new idea. Identifying money as an idol or potential idol has deep roots in Judeo-Christian thought. It’s there in the Hebrew Prophets, in Jesus’ teaching about ‘Mammon’, in the apostolic teaching about greed (‘which is idolatry’, Col 3:5), and plays in important role in Christian ethical discourse thereafter. Selby clearly knows this, and even makes reference to some of this material, but seems strangely slow to acknowledge or engage with what others have said.
To be saying something new, Selby needs to demonstrate that money has changed somehow – that it has become ‘more of’ and idol, with a more powerful role over peoples’ lives than it has ever had before. But the argument here is unclear. One problem is that he never quite defines what he means by ‘money’, and seems to use the word in a number of different ways — sometimes referring to currency, sometimes wealth, sometimes ‘a set of ideas’ or even a ‘controlling force’. Another problem is the absence of any evidence or data beyond the anecdotal to back up the claims being made. These are basic issues of method. There also seems to be an insufficient grasp of some of the issues. For example, Selby argues that the globalization of money creation – removing some of the sovereign power once possessed by individual nation states over their currencies – has given money a destructive, anarchic life of its own, ‘acting only on its uncontrolled instinct to produce more of itself’ (page 53). It doesn’t seem to occur to him that the decentralization of money creation might have some good features – taking away too much power from any one player in the system, for example. No doubt there’s much more to say on this, and these are complex issues. The problem is: the issues and counter-arguments are hardly raised at all. Selby generates considerable heat as he develops his polemic – but not much confidence in his depth of understanding.
What then of the theological reflection towards the end of the book? This begins well enough with some reflections on the nature of idolatry. But we then get some very strained readings of Jesus’ parables as anti-market polemics (pages 98–110) – a classic case, if ever there was one, of someone reading into a text precisely what they want to hear. Weaker still is the proposed solution to the problems Peter Selby finds in modern money – what he calls ‘the mercy economy’ (pages 111–126). Given everything he’s said earlier in the book, this rather surprisingly doesn’t seem to involve getting rid of money altogether. It is in fact quite hard to work out quite what it is or might involve, beyond perhaps some debt forgiveness and maybe, perhaps, some kind of universal basic income (page 124). Whatever the ‘mercy economy’ is in detail, Selby seems to be suggesting that the solutions to the problems of money-idolatry lie in structural change or intervening to reform ‘the system’. For a theological reflection, there is precious little on the battle in the human heart behind our tendency to idolatry – and what can be done about that – which is where a deeper reflection on the Scriptures might have taken him.
Reviews of bad restaurants can be fun to read and I suspect they are quite fun to write (which then compensates, somewhat, for the critic’s experience of the meal itself). Every failed dish or example of poor service is described and unpicked with a darkly humorous glee and relish. One could probably do the same with the claims and arguments of An Idol Unmasked, picking over them one by one. But the practical purpose of a bad restaurant review is to advise readers to find a meal elsewhere. Likewise with this book. Anyone in search of a balanced and insightful analysis of contemporary monetary systems and markets, coupled with some deep theological reflection, is not going to find it here.
“An Idol Unmasked: A Faith Perspective on Money” was published in 2014 by Darton, Longman and Todd Ltd (ISBN 978-0-232-53111-4), 140pp.
Revd Dr Ben Cooper is Minister for Training at Christ Church Fulwood in Sheffield. He holds doctoral degrees in both Theology and Economics. Before training for ordained ministry, he was a post-doctoral research fellow in economic theory at Nuffield College, Oxford. He is married to Catherine and has three children.
American essayist and novelist William Styron once said that “A great book should leave you with many experiences, and slightly exhausted at the end.” If we judge the late David Landes’ ‘Wealth and Poverty of Nations’ by this criterion, it most certainly fits the bill of a ‘great book’. It is a majestic display of his deep insight and vast knowledge of global economic history. It comes as no surprise, therefore, that the book has been all but universally acclaimed by literary critics.
David Landes was Professor of History and Emeritus Professor of Economics at Harvard University. His other works include Bankers and Pashas, Revolution in Time, The Unbound Prometheus and Dynasties. As one might expect, therefore, ‘Wealth and Poverty of Nations’ is no short and easy read: half a millennia of global economic history are covered in over 600 pages and 29 chapters.
Landes’ primary aim in the book is to better understand how nations have evolved to reach their current state. Landes’ main thesis of the book is that cultural traits and cultural values play a key role in determining whether a country fails or succeeds economically. As he points out in the Preface, the analysis is not one of a “multicultural, anthropological sense of intrinsic parity: all peoples are equal and the historian tries to attend to them all. Rather, [to]…understand how we have come to where we are, …[through] making, getting, and spending” (page xi).
In this sense, ‘The Wealth and Poverty of Nations’ provides a fascinating and distinctive historical angle that considers the cultural circumstances, as well as the economic trends of the time – thus, viewing economic history through a cultural lens.
Landes opens up the discussion with the premise that the old dichotomy of the West vs. the East, or better said, West vs. the ‘Rest’ has largely dissolved (page xx). The more pertinent split in today’s ‘globalised’ world is between ‘Rich’ vs ‘Poor’ countries. The common thread of questioning that is present throughout the entirety of the book is this: why have some countries come to be so poor and some so rich?
In the opening chapters Landes presses the idea that the technological and cultural advancements enabled the (relatively small) nations of western Europe to significantly punch above their weight (page 137). The Industrial Revolution in Europe brought technological innovations that had tremendous long-term impact on economic development. Basic advancements cotton manufacturing for instance, enabled the creation ‘washable’ clothes. This in turn led to better personal hygiene and therefore, better health and an increase in life expectancy. The technological advancements improved all areas of life in the Continent
Landes also points out that throughout the late 17th Century and 18th Century, England’s relative open society enabled it to flourish at a faster pace than its European counterparts, many of whom were deeply embattled with religious persecution (page 223). As a result, England managed to ‘profit from other nation’s self-inflicted wounds’ (ibid).
Yet arguably one of the most powerful and convincing arguments of the book is raised in Chapter 12 (page 175 – 181). Here David Landes reinstates Max Weber’s thesis on the Protestant work ethic. The core argument here is that the Protestant revolution in Europe brought with in a change in the role and responsibility of work. The influence of Protestant thinking encouraged people to value, creativity, hard work, timeliness, and free-thinking. This in turn acted as a catalyst for economic growth not only in Europe, but also in the early development of America (CEME’s Director, Richard Turnbull, wrote on the impact of Quakers in Quaker Capitalsim: Lessons for Today)
The latter half of the book bring the discussion back to the impact of culture on economic performance and how the two are intrinsically linked. In Thailand for example, young men are encouraged to spend a few years in religious (Buddhist) monasteries before entering the world of work. Landes argues that this sets their priorities right – and makes them more effective once the do enter the ‘materialistic’ world of work, where money plays a major role (page 517).
Landes concludes the book with a discussion on the current tensions between globalisation and the nation-state, but also the merits of free-trade and some of the benefits and dangers of international aid (Page 519-521). In a nutshell (and without giving too much away), the book argues that free trade between nations is disproportionately beneficial and foreign aid can do as much damage as it does good. Landes overarching conclusion is that the adoption of a free market economy (especially by poor countries) is the surest and safest way to long-term economic development and wealth creation.
‘The Wealth and Poverty of Nations’ leaves its reader with a completely new, and unique understanding of the role that culture plays in the historic economic development of countries. Finding criticism for this book is a challenge in itself, I have found myself nit-picking at best. One possible observation is that, even in 600+ pages, it remains difficult to comprehensively capture half a millennia of world history.
Some may say that it is too Eurocentric. Yet the book’s apparent Eurocentrism is part of the presentation and hypothesis that is put fourth – it is the angle that the author adopts rather than an inherit bias. In response to this perceived ‘Eurocentrism’ and being a ‘Westerner’, Landes himself acknowledges that, “I feel surer of my ground” (page xxi). Nonetheless, one could argue that the cultural intricacies of each geographical region can, and deserve to be explored in greater depth.
‘The Wealth and Poverty of Nations’ has become a staple in the field of economic history.
A definite read.
“The Wealth and Poverty of Nations” was published in 1999 by Abacus, ISBN-10: 0349111669, 672pp.
Andrei Rogobete is a Research Fellow with the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.
Rhodri Davies is the head of “Giving Thought”, the in-house think tank of Charities Aid Foundation. He believes that, “Although philanthropy is growing in prominence, there is still a real lack of clarity about its overall role in our society” (page 7) and in Public Good by Private Means he seeks to affirm its continuing role and clarify what that role is. The result is an interesting, though provoking and readable book that could assist people who wish to provide material support for charity or wish to influence public policy. Unfortunately, however, the book suffers from a number of deficiencies, which diminish its overall impact.
The most fundamental of these deficiencies relates to the thing that Davies is analysing. He expressly declines to give a precise definition of “philanthropy” (page 8). Instead, he says that he considers “the characteristics that typify philanthropy in its modern form” (page 8) and he leaves us to absorb his understanding as we read on. He distinguishes medieval religious alms giving “where the focus was primarily on what it meant for the donor and their immortal soul” from modern philanthropy, which he regards as giving “focussed on addressing the problems of society” (page 8) and it is clear that he does not have religious motivation or giving to religious causes in mind. Furthermore, although there is some discussion of support for the arts and education (e.g. page 99ff), it is clear that he is thinking mainly of the alleviation of poverty in much of his discussion. Indeed, his focus appears to be primarily on poverty in the UK (and, to some extent, the USA) rather than in the world as a whole.
Of course, an author may define his subject as he pleases. However, it is questionable whether Davies’ restricted focus is helpful and, more seriously, his lack of precision leads to conclusions that, on their face, appear to apply to a broader range of charitable activity than is justified by his arguments.
Parts of the book are tightly argued but Davies has a tendency to make sweeping assertions that lack support. For example, he asserts that “Philanthropy, properly understood, is about trying to improve society by tackling the root causes of problems, rather than just addressing their symptoms” (page 12) and thereby, dismisses disaster relief from its ambit. Likewise, a few lines later, he asserts that “tolerance for risk is one of philanthropy’s greatest assets” and later rhetorically asks “If philanthropy is unwilling to break the bounds of convention or afraid to think beyond the status quo, then what is the point of it?” (page 173). Whilst few would deny that there is a place for risk taking and “breaking the bounds”, this dismissal of other forms of philanthropy is surprising.
More seriously, important assumptions that underlie some of the book’s statements and conclusions are never properly examined or even, in some cases, stated. The most pervasive of these is the acceptance of what might be called the “post war consensus” regarding the role of the state. Davies appears to believe that the only theoretical alternative to the state doing those things that it does at the moment is for charity to do them and he rightly regards this as being impractical. However, he never considers the possibility that some of the things that are done ought not to be done at all, since they do more harm than good.
Davies also appears to accept the view that poverty is, at least largely, “something stemming from the wider failings of society” (page 35) and to regard the view that it may result in part from the failings of an individual as being hopelessly out of date. Indeed, he appears to believe that the poor are poor because the rich are rich since he states that “While the rich might not be entirely to blame for society’s failure to distribute wealth more evenly, the very fact that they are rich while others are poor is the root of the problem” (page 158). This is a disappointingly naïve approach.
The book suffers from a disturbing schizophrenia when it comes to individual choice. Davies asserts that, “The freedom for individuals to choose where they direct their gifts lies at the heart of philanthropy and gives it much of its strength” (page 11). Yet elsewhere he suggests that “what constitutes and acceptable charitable purpose is an ongoing source of debate” (page 192) and he states that “Philanthropy poses a fundamental challenge to democracy: by offering individuals a way of furthering their own priorities outside the normal democratic process, it potentially subverts the authority of elected officials and allows a small minority of those with significant wealth to exert a disproportionate influence on the direction in which society is travelling” (page 85). This implies that society should only allow philanthropic giving in line with some centrally determined priorities, which would require authoritarian governmental interference.
In relation to this and a number of other matters, it is unclear precisely what Davies’ views are since it is unclear whether he is merely reciting the arguments of others or endorsing these arguments. Overall, however, the book has a decidedly left-wing flavour. For example, the adoption of Finlayson’s view that levels of trust in charity fell following the 1926 general strike because of the efforts of volunteers (including Oxbridge students) in “strike breaking” (page 64) is contentious. Likewise, the suggestion that “the empowerment of women through charitable activities” is something that was seen in “the experience of women during the British miners’ strike of the 1980s” (page 90) is, to say the least, a strange choice of example.
These deficiencies may leave some wondering whether the book has any value but this would be an unduly severe judgement. It places modern philanthropy firmly within an historical context and the short “case studies” inserted in the text bring the history to life. By describing approaches in past centuries and views and arguments expressed in the past, it allows the reader to consider possibilities that might be ruled out by the prevailing twenty-first century consensus. Furthermore, whatever one may think about the arguments that have been and continue to be made against philanthropy, it is essential that we understand and address these arguments.
The book also contains valuable discussions of some important policy issues. These include the perennial hot potato of the involvement of charities in political activity, the justification for tax breaks for charities and giving to charities and the question whether charities should accept money from tainted sources. As regards the first of these, Davies states that “one of the main points of this book is to argue that involvement in the ‘political’ arena through campaigning and advocacy has always been one of the most important aspects of philanthropy organisations” (page 95). However, he later criticises some Victorian philanthropists on the grounds that they “brought ideological baggage with them” and he refers to “The necessity to look beyond ideology in picking philanthropic approaches” (page 188). It is unclear how these statements are to be reconciled and one is left with the impression that Davies supports an ideological approach provided that he agrees with the ideology! Nonetheless, by laying out the issues, he has assisted the debate.
Much the same could be said for many aspects of Public Good by Private Means. One does not have to agree with Davies’ assumptions, statements or conclusions to benefit from reading it. Provided that it is read in a critical manner, it should stimulate valuable thought and discussion. That is why it deserves to be read.
“Public Good by Private Means” was published in 2015 by Alliance Publishing Trust (ISBN 978-1-907376-24-5). 207 pages (excluding bibliography and references).
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.
Saving Capitalism – For the Many not the Few is the latest addition to Robert Reich’s cohort of publications. He is perhaps best known for his previous work, The Work of Nations (1992) which raised the issue of growing inequality to the public sphere. Alongside his writing, Robert Reich is also a Professor at the University of California, Berkeley, and has served in various positions under the administrations of Gerald Ford and Jimmy Carter. Most notably, he was US Secretary of Labour under the Presidency of Bill Clinton between 1993 – 1997.
At the age of 71, Reich brings a lifetime of experience in both academia and politics to the table. As a true social-democrat, Reich’s Saving Capitalism is a continuation of the themes he discusses in previous publications – some of which include: rising inequality, the not so ‘free’ marketplace, the over-concentration of political and economic power in the hands of a few, the disenchantment of the masses, and others.
As the title may suggest, Saving Capitalism is a critique of the free market structures and modern-day capitalism. Reich argues that decision-making power is increasingly concentrated in the hands of a few, at the expense of the ‘many’. The very rich get richer and more powerful, while the middle and lower classes get weaker and poorer. The entire system is rigged against the majority in favour of a concentrated few. The solution to this injustice, Reich suggests, is an “…activist government that raises taxes on the wealthy, invests the proceeds in excellent schools and other means people need to get ahead, and redistributes wealth to the needy” (page xvii).
Does this narrative sound familiar? To many it certainly will. Robert Reich’s Saving Capitalism is therefore one among numerous publications that champion the social inequality-class warfare thesis. In that sense, the book brings little to nothing new to the debate. Nonetheless, it is well-written and its use of colloquial language grapples the reader. This does however make the book read like more of a socio-political novel rather than a macroeconomic or political account. One cannot help but feel that Reich’s desire to push his own personal narrative has come at the expense of rigorous analysis.
But before jumping to any conclusions, let’s briefly touch upon the structure and content.
Saving Capitalism is comprised of three main parts. The first chapter, entitled “The Free Market” aims to show how in fact ‘free markets’, are not ‘free’ (page 85).
As you may have already guessed, Reich argues that this is due to them being controlled by a select, powerful few that both establish and control rules in which a ‘free market’ operates. He argues that there are five ‘building blocks’ of a free market: property, monopoly, contracts, bankruptcy and enforcement. Each of these require human governance and can be used to either, promote a fair and decent society or can be manipulated to benefit a select few (page 9). This first part of the book argues that the latter has occurred. The stronghold on patent laws by pharmaceutical companies, the large lobby budgets of corporations to maintain dominant market positions, the abuse of bankruptcy laws, are all cited as evidence that the entire system is rigged in favour of on elite few.
The second part of the book is dedicated to showcasing the consequences of such a rigged system. Here Reich argues that free market meritocracy is in fact, a myth. Those at the top increase their own wages whilst those at the middle and bottom see their wages stagnant and in many cases, decline (pages 134-167).
In the third and final chapter, Reich argues for a restoration of countervailing power, or in layman’s terms, bringing power back to the people. The means by which he believes this can be achieved are certainly not new: an increase in the minimum wage, amending labour laws to favour unions, and changing contract laws as to encourage employees and workers to take action against unjust employers (pages 153 – 217).
So while Robert Reich’s latest work presents a compelling critique of the challenges facing 21st century capitalism, it brings little new to the table. Moreover, any truly impartial reader that has some basic understanding of economics would be quick to observe that Saving Capitalism is unabashedly lopsided. There is no doubt that western capitalism is at a crossroads, and the aftermath of the financial crisis has left millions feeling disenfranchised. However, Robert Reich portrays injustices within the free market (as real as they may be), as characteristic of the entire economy. It’s a bit like saying, we can’t play football anymore because one of the players faked an injury.
He also seems to portray an over-the-top form of class warfare: the elite vs. the rest. As if the classes are statutory and unitary groups with no movement or change between. The rich and powerful only stay rich and powerful while the rest suffer the consequences of their actions. We know this is simply not the case – a free market economy does indeed reward creativity and work. Whether, intentional or unintentional, Reich left out any deeper economic discussions, such as aggregate supply/demand and its impact on market meritocracy. This brings us to what is perhaps the most significant pitfall of the book, it is far to rooted in empirical storytelling rather than political or economic analysis. No matter how broad Robert Reich’s experience may be, personal examples should always be an addition to the argument and not its foundation.
Having said that, Saving Capitalism offers some captivating thoughts on the current state of free market. Provided that its rather superficial and politicised arguments are viewed through a critical lens, the book is certainly a worthwhile read.
“Saving Capitalism: For the Many, not the Few” was published in 2016 by Icon Books Ltd. (ISBN: 9781-78578-0677). 279pp.
Andrei Rogobete is a Research Fellow with the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.
For the Least of These comprises a collection of short essays. Its purpose is clearly articulated by Arthur Brooks in the first paragraph of the Foreword: “The Christian Gospels make it abundantly clear that Jesus called on us to care for the poor. What is not at all clear, however, is the best means by which Christians living in a modern, industrial society … can and should carry out the Lord’s directive. This volume takes on the challenge of beginning to answer that question” (page 7).
The book seeks to fulfil its task through twelve chapters grouped under three headings: “A Biblical Perspective on the Poor”; “Markets and the Poor”; and “Poverty Alleviation in Practice”. As might be anticipated by those aware that its editors are Vice-Presidents of the Institute for Faith, Work & Economics, its basic thesis is that a free market economy is the best foundation for the alleviation of poverty. The authors are careful to avoid suggesting that the market automatically provides the solution or that the market is in some way an end in itself but they see it as having inherent potential. As Robert Sirico puts it in his chapter, “The price system in a free economy does not provide a moral foundation for a society. It does not remove opportunities for ill-gotten gain. What it does do is beat every form of socialism at generating moral socially beneficent options for escaping poverty” (page 179).
Negatively, the authors take issue with what Jay Richards (in the Conclusion) calls the “untutored intuition” that “if there are some rich people and some poor people, we can cure poverty by taking some of the wealth of the rich and giving it to the poor” (page 247). It is suggested that both government action (e.g. foreign aid) and some charitable activity (e.g. some gifts by churches to support people in the third world) is misconceived, if well meaning.
Positively, the promotion of trade and enterprise is advocated as the best long-term solution to poverty. For example, Brian Griffiths and Dato Kim Tan suggest that “Intentionally building a new factory close to a slum, creating jobs, and contributing to the local economy through its monthly wage bill, is far more effective in tackling poverty than all the CSR activities that companies can ever do” (page 145).
Most of the book is relatively high level. There are some interesting specific proposals for change. For example, Griffiths and Tan suggest that it is illogical to allow tax deductions for donations to charity but not to apply the same tax incentives to impact investing that builds social enterprises among the poor (page 151). However, proposals of this kind are few and far between. This is a pity since the inclusion of some more would have improved the book. In particular, the book’s suggestion that a lot of government action has produced drug like dependency cries out for proposals as to how the patient should undergo detoxification without dying in the process! On the other hand, the authors might legitimately respond that it is necessary to win the conceptual battle at the macro level before moving to the detail and that this is a small book devoted to that conceptual battle. Furthermore, by its very nature, a market based approach is likely to involve a multitude of approaches informed by general principles rather than large over-arching policies centrally implemented. That, indeed, is one of its advantages.
Of course, the essay format has some drawbacks. In particular, as might be expected in a book with fourteen different contributors, the arguments are not developed in a linear manner, the chapters overlap and not all of the arguments are consistent with one another (e.g. there are differences of view as to how bleak or otherwise the outlook for global poverty really is and different levels of optimism are expressed regarding micro-finance initiatives). In addition, some of the authors have tried to cram too much into their chapters, with the result that they are longer on assertion than argument and adopt language which, at least to UK ears, is unduly polemical (e.g. Jay Richards won’t win many friends by suggesting that Lyndon Johnson’s “War on Poverty” could just as well be called the “War on the Poor”, page 250).
Most readers will want to take issue with at least some of the arguments that are advanced, although they may not agree which arguments should be challenged! For example, David Kotter’s distinction between “wealth” and “riches” (page 60) and Robert Sirico’s suggestion that something is disordered “when it is imbalanced and disregards reason as well as the mandate of scripture” (page 176) are contentious interpretations of the bible. More generally, with the exception of Brian Griffiths, Dato Kim Tan and Richard Turnbull, all of the authors are based in the USA and the book has a clear US perspective. Indeed, some of the chapters relate almost entirely to the US experience (e.g. Anne Bradley’s chapter on Income & Equality). This US experience is important and interesting. There is much to learn from it. However, it would be good to consider other perspectives.
That said, each author contributes something worth thinking about and some of the contributions are very good: the chapters examining historic attitudes and actions in the UK and the USA (by Richard Turnbull and Mark Isaac, respectively) are particularly interesting since they allow the past to challenge contemporary attitudes; Art Lindsley’s short chapter on wealth redistribution comprises a concise demolition of superficial interpretations of the Old Testament Jubilee laws and of the practices of the New Testament Church; and Marvin Olasky’s chapter on the US welfare system, although in some respects perhaps over journalistic, raises a number of issues that deserve careful consideration.
For the Least of These is not a book for those looking for careful engagement with academic debates. Those looking for a systematic explanation of the potential of the free market to alleviate poverty should also look elsewhere. However, it is well worth reading. Few readers will come away without being challenged in some respect and the range of subjects covered should be a spur to further reading and thought.
“For the Least of These” was published in 2014 by Zondervan (ISBN – 10: 0310522994). 252 pages (excluding notes and glossary).
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.
The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of Capital Markets for the Good of Society: A Christian Perspective by Lyndon Drake.
The publication can be downloaded here. Alternatively, paperback copies can be ordered by contacting CEME’s offices via email at: office@theceme.org
An event associated with this publication was held in November 2017
About the Publication
Capital Markets for the Good of Society discusses the ethical foundations and societal benefits of capital markets from a Christian perspective, emphasizing their role in promoting human flourishing and economic fairness.
It makes the case that capital markets — despite their terrible public image — provide genuine and often overlooked benefits to society, particularly to the poor. Drake argues that public discourse is dominated by highly visible failures like the 2008 financial crisis, while the gradual, dispersed benefits of capital markets go largely unnoticed.
To assess social utility, Drake develops a framework grounded in Christian theology, using ancient Israel as a paradigm. Drawing heavily on the book of Deuteronomy and early Church thinkers like Basil of Caesarea and Clement of Alexandria, he identifies key principles: that economic structures should promote human flourishing and creativity, that justice includes a redemptive dimension (not merely punishment of wrongdoing), and that no person or group has an absolute right over capital — ownership is contingent and comes with obligations.
From these theological foundations, Drake distils four practical norms for evaluating capital markets: they should provide harmless credit for the poor, support personal economic freedom, ensure visibly fair pricing, and enable broad participation in material blessings — not just aggregate GDP growth.
He then applies these norms to specific market types — bonds, equities, commodities, currencies, money markets, and derivatives — arguing that each provides measurable social utility. Government bond markets fund public infrastructure and welfare; equity markets democratise investment access; commodity markets protect weaker participants through transparent pricing; currency markets enable vast wealth transfers to developing countries through remittances; and even derivatives, despite their complexity and risks, lower borrowing costs in ways that disproportionately benefit poorer borrowers.
Drake also addresses the real problems: harmful products like NINJA mortgages, market scandals, information asymmetry, excessive compensation, and overleveraged speculation. However, he concludes that these are reasons for better regulation and cultural reform within the industry, not for dismantling capital markets themselves. The deeper challenge, he argues, is that the benefits of capital markets are gradual and invisible while their failures are dramatic and headline-grabbing — making it easy for society to undervalue what these markets actually contribute.
About the Author
Dr. Lyndon Drake (PhD, Computer Science, York; MA, Theology, Oxon) is a research student at the University of Oxford, working on a biblical theology of capital. Until 2010, Lyndon was a Vice President at Barclays Capital, trading government bonds and interest-rate derivatives. He now chairs the Council for Business and Theology (part of the Business Coalition of the World Evangelical Alliance), and has served as pastor of a city centre church in New Zealand, as well as teaching the theology of work at seminaries and serving in regional church leadership.
Crumbling Foundations is a stimulating and largely informative introduction to money and monetary systems. It includes a brief account of the history of money, an analysis some of the issues and problems of contemporary monetary systems, and some thoughts about how money might develop and diversify in the future. It also claims to be a biblical critique of modern money. The bulb on the back of the booklet says it brings biblical principles to bear ‘on a monetary system [that] is fundamentally unjust and unstable’.
The descriptive elements of the booklet are mostly good, much as one might find in a chapter on money in an introductory book on economics — with only a few places where an economist might want further clarification. Moreover, as a critique, this booklet has some important things to say. It’s very helpful to understand what money is, how it works, how it’s ‘made’ — and how it can be manipulated by the parties involved. It’s important to understand the vulnerabilities of different monetary systems, not least our own, and the different possibilities for monetary reform or innovation. That said, this booklet presents an almost entirely gloomy picture of the role of money in recent economic history. I would have liked more on the positive side — the contribution of banking and money to innovation, growth and the reduction of poverty, for example.
I was less persuaded by the many claims in the booklet to be a biblical analysis. There are two main ways the biblical material is brought to bear on the contemporary issue of money. The first relates to the biblical material concerning lending at interest. The claim is that the Bible presents lending at interest as ‘a form of injustice and oppression’ (page 25). This places the biblical approach at odds with modern monetary systems in which ‘debt and interest are inherent’ (page 19) and where most money is ‘created hand-in-hand with debt’ (page 41) — suggesting the need to develop systems of ‘positive money,’ created without debt (pages 41–42). But the biblical material on lending at interest is almost entirely concerned with situations of borrowing as an emergency measure to survive a period of extreme poverty. The biblical case laws regulate lending in this case, so that lenders do not profit from the misfortune of their neighbours, and so that borrowers have every opportunity to escape their poverty. To extrapolate from these cases to issues of debt and lending in general is quite unwarranted. Indeed, from Deuteronomy 23:20 it’s clear that lending at interest in some cases absolutely fine — ‘you may charge a foreigner interest’. This exception to the ban on charging interest in the rest of these verses does get a mention (page 20), but is skipped over with such unsatisfactory brevity that it renders this part of the booklet wholly unpersuasive.
The second way the biblical data is applied in the booklet relates to the wariness we find in the biblical account to centralised authority (page 12). Biblical teaching is concerned with ‘limiting [the] concentration of power’ (page 44). We can agree this is a biblical principle — although it’s perhaps more implicit than explicit, and certainly not spelled out in any great detail. But how much traction it gives us when we apply it to questions of money and the design of monetary systems is doubtful. After all, monetary systems are already to some extent decentralised. Individual nations tend to have their own currency, and individual governments frequently discover they have far less control over the money supply than they would like. How much centralisation is too much centralisation? It seems to me the Scriptures don’t give us any explicit guidance here. We have to come to a conclusion some other way.
Guy Brandon doesn’t fall into the trap of taking biblical descriptions of money and monetary practice and turning them into contemporary prescriptions. That would be a mistake, and he recognises this very clearly (page 34). (Just imagine doing something similar with the biblical descriptions of agricultural practice in the ancient world and building a ‘biblical critique’ of modern mechanised farming techniques.) Nonetheless, he does get pretty close to this mistake, especially in the concluding comments (pages 44–45). And he does overstate what the Bible has to say explicitly and directly on the ethics of money and monetary systems. It may well be in the end that money is one of many issues on which the Scriptures do not speak directly. As creative beings made in the image of God we are expected to work it out for ourselves — within broad parameters, summarized as loving God and loving neighbour. An exercise in biblical wisdom, then. To which at least some parts of this booklet make a useful — if rather one-sided — contribution.
“Crumbling Foundations: A Biblical Critique of Modern Money” was published in 2016 by The Jubliee Centre, Cambridge, 56pp.
Revd Dr Ben Cooper is Minister for Training at Christ Church Fulwood in Sheffield. He holds doctoral degrees in both Theology and Economics. Before training for ordained ministry, he was a post-doctoral research fellow in economic theory at Nuffield College, Oxford. He is married to Catherine and has three children.
This book is a collection of previously published articles and one unpublished conference paper, with a new 46 page long introduction. It is therefore not a book that develops an argument skillfully and steadily, rather it hammers away at certain themes, sometimes repetitively. Streeck acknowledges this in his Note on the Text, where he admits to an ‘occasional overlap between chapters’ (p. ix). Having read through them all I did feel that at times this repetitiveness was unfortunate, although there is undoubted value in having the various articles gathered in one place.
The organizing theme taken by Streeck is that capitalism is collapsing because of certain internal contradictions. What is more, the author believes that we are living in a period of ‘deep indeterminacy’ (p. 12) in which it is difficult to predict what will happen, and that there is nothing obvious to replace our contemporary capitalist system. Other than at two brief moments, the prophetic message given is one of doom and gloom throughout the entire book, with no real sense of hopeful possibilities. In an emotional sense, and perhaps also because of its repetitive nature, I therefore found that reading this book left me dispirited, but also with a sense that the analysis might be incomplete or flawed.
One of the recurring strands running through the book is that of the relationship between economics and sociology. This is addressed through the lenses of economic history, the nature of money and debt, the difficult relationship between capitalism and democracy, commodification and inequality, and a consideration of the class structures within society (Marx certainly gets several mentions). This is summarized admirably concisely and clearly in the final paragraph of Chapter One, which bears the same title as the book itself, and which started life as a lecture given at the British Academy on 23rd January 2014.
At heart, although he never exactly states it in this way, Streeck presents a vision of capitalism as an epoch within history, whose time was always going to be limited, rather than accepting a view of history that must fit within a capitalistic meta-narrative. In order to sustain this argument, the author needs to describe capitalism in a certain, rather dysfunctional, way. So for example, Streeck sees innovation as something that ‘attacks and destroys in particular firms and markets that operate to everybody’s satisfaction.’ (p. 39) I was not convinced by this. It seemed to me that the author’s structuralist view of society had left little space for human creativity, and left him unable to see individuality as anything except a problem. However, prompted by Streeck’s analysis I did find myself asking about the nature of a wholesome vision of collective life within which individuals can flourish, and what kind of ‘progress’ this would mean.
The two moments, hinted at above, when Streeck himself ventures into the territory of suggestions or answers to these questions come at the end of Chapters Eight and Nine. Chapter Eight considers the troubled relationship between democracy and capitalism, taking the work of Wolfgang Merkel as a foil, but I was heartened to discover the suggestion of ‘de-globalizing capitalism’ (p. 198) and the idea that ‘restoring embedded democracy means re-embedding capitalism’ (p. 199) (italics in the original). For me, this idea offers the genesis of a new piece of work, different in tone to the current collection, and I would encourage Streeck to reflect on how this could be developed. Rather different, but equally important, is the moment at the end of Chapter Nine when Streeck feels for ‘…a non-capitalist politics capable of defining and enforcing general interests in the sustainability of human society’ (p. 225). I took this to be a call for the complex relationship between politics and economics to be re-imagined.
This brings me to another problem that I had with this book; it has in a sense been overtaken by the events of the Brexit referendum and the election of Donald Trump. The relationship between politics and economics is being re-drawn before our eyes, the old assumptions are unraveling, and faltering attempts at what could be called a ‘non-capitalist politics’ are emerging. I feel sure Streeck must now be writing something new, and I would encourage him to do so. From a Christian perspective, deep questions of identity connected to the individual and to society are very resonant with theological reflections on the nature of life itself, and the way in which societies and economies are arranged. I was therefore pleased to have been stimulated in my own thinking as I read this book. I look forward to a more cohesive, less repetitive, and post-Brexit sequel.
The book is nicely presented with a good index. The author is the Director of the Max Planck Institute for Social Research in Cologne and Professor of Sociology at the University of Cologne.
How Will Capitalism End? Essays on a Failing System – by Wolfgang Streeck, 2016, ISBN 13: 978-1-78478-401-0
Edward Carter is Vicar of St Peter Mancroft Church in Norwich, having previously been the Canon Theologian at Chelmsford Cathedral, a parish priest in Oxfordshire, a Minor Canon at St George’s Windsor and a curate in Norwich. Prior to ordination he worked for small companies and ran his own business.
He chairs the Church Investors Group, an ecumenical body that represents over £10bn of church money, and which engages with a wide range of publicly listed companies on ethical issues. His research interests include the theology of enterprise and of competition, and his hobbies include board-games, volleyball and film-making. He is married to Sarah and they have two adult sons.
The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of The Economics of the Hebrew Scriptures by Ben Cooper.
The publication can be found here.
Alternatively, for hardcopies please contact CEME’s offices via email at office@theceme.org
In 1987 ICI, one of the leading chemical conglomerates at the time, described its purpose as follows:
ICI aims to be the world’s leading chemical company serving customers internationally through the innovative and responsible application of chemistry and related science. Through the achievement of our aim we will enhance the wealth and well-being of shareholders, employees, customers, and communities which we serve and in which we operate.
In 1994 the company objective had changed to:
Our objective is to maximise value for our shareholders by focussing on businesses where we have market leadership, a technological edge, and a world competitive cost base.
So, what changed? What changed so that ICI no longer aimed to be the world’s leading chemical company? What changed such that ICI’s application of science was no longer to be the innovative and responsible application of chemistry and related science, but only that in which they had a technological edge? What happened to the employees, customers, and communities which we serve, to be replaced by to maximise value for our shareholders?
The answer requires a book rather than a blog but the case of ICI is illustrative of the way in which business has become separated from ethics, values and a truly holistic purpose which historically served the economy and society well.
The Quakers represented, in 1850, no more than one half a percent of the population. Thus it is even more extraordinary just how many of our household names had Quaker origins – not least in financial services – Barclays, Lloyds, Friends Provident, Cadbury, Rowntree, Clarks (as in shoes), Huntley and Palmer (biscuits). The successful iron smelting that formed the basis of the Industrial Revolution came from a Quaker family, the Darbys.
I am not suggesting that the solution to the problems of business purpose and intent today is solved if we all became Quakers! However, what I am saying is that by understanding the key reasons why the Quakers were successful (mostly) in business can inform our contemporary debates in a helpful manner.
There were four key reasons behind Quaker business success, all of which have wider application today.
Entrepreneurs do not flourish alone. Professor Mark Casson of Henley Business School has argued that the quality of entrepreneurship depends upon the quality of business culture. A strong culture is built upon trust, confidence integrity and quality. The strength of the Quaker culture had a direct impact upon their business success. The Quakers – among others – had by 1800 faced around 150 years of oppression, crucially including exclusion from the Universities. Hence many Quakers turned their minds to business. This persecution made them close-knit communities and it was within this setting that apprenticeships were developed, trust and confidence built as the major families all knew each other, with dishonesty and especially bankruptcy viewed in highly negative terms due to the impact on Quaker reputation. A strong culture which enhanced positive behaviour of honesty and integrity (quality products at fixed prices) and discouraged negative behaviour.
A major complexity today is that we have become so individualistic that moral behaviour is reduced also to the behaviour of each individual. We need to recover not ‘moralising’ but ‘moral character’ and ‘moral action.’ The reality is that much of the Quakers integrity derived from their spiritual principles. Their moral codes included injunctions against overtrading, honesty, payment of debts, caution over indebtedness, transparent and accurate accounts and understanding of the business. These principles derive from the Quaker ‘Advices’ and ‘Queries’ on trade issued between 1675 and 1793. Many Quakers became wealthy, but often had to endure the long and patient wait of the entrepreneur for success. As a result, they were not ostentatious with their wealth and certainly exercised personal discipline and frugality in the wait for a return. There are clear lessons for us today and we must become more willing to talk about moral values.
Generally speaking, negative views of business are aimed at the big corporates and more positive views of business related to smaller, local and family businesses (SMEs). All the successful Quaker businesses began as family businesses. Indeed, most involved the capital of the founders and owners being placed at risk. The opposite of limited liability. Growth inevitably led to a dilution of the family business and the need for capital ultimately led the leading Quaker businesses to adopt limited liability. However, the idea of the family business lay at the heart of the Quaker vision. The business was seen as part of the family and as a result concern for both quality products and the employees – so, everything from sport, to societies, savings clubs but also pension funds, sick pay and even bonus schemes.
The compartmentalisation of business from society is disastrous. The Quaker businesses had a much more holistic view of their purpose. Profitability was essential, but so were reputation, customers and the society of which they were part. The days of company’s building model villages providing housing – not charitable, but commercial – as well as ensuring community green space, fresh air and light may be over but the principles still provide lessons. Social purpose and commercial profitability and success are not mutually exclusive. Real relationships – between owners and managers, managers and workers, companies and customers and so on – are infinitely more purposeful than the remoteness and the contractual nature of so many business relationships.
How far we have come. Without a sense of ethical responsibility, disciplined moral behaviour and character and a recognition that capital and its economic return carry responsibilities as well as rewards, we will continue to increase the divide of business and society. However, we must also recognise that all of this can only be achieved in the context of a free economy where wealth creation is celebrated rather than despised and where the limits of government are recognised to be as significant as its regulatory and redistributive roles. A concern for society and the responsibilities of wealth do not need to be separated from a wealth-creating, efficient business enterprise. Profit is virtuous, but does not need to be maximised at the expense of all other demands.
Culture, ethics, family relationships, purpose, values, employees, responsibility – for all these things we can thank, at least in part, the Quaker businesses. All of those things are essential in restoring confidence in business today.
Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.
Those who have studied modern technology based or enabled companies will doubtless consider Platform Capitalism to be superficial. Srnicek does not provide any worked through suggestions that will be useful either to the makers of public policy or to those involved in the management of business and many of his conclusions are contentious and appear to be based more on his prior left-wing accelerationist philosophical position than on the evidence presented in this book.
And yet: the book is interesting and thought provoking. Leaving aside the eccentric use (or, rather, minimal use) of paragraphing, Srnicek has an engaging style and presents a readable and helpful overview of the impact of technology on economic activity and of the strategy of technology companies. The book is short (l29 small pages) and can easily be read carefully in a couple of evenings. It is worth devoting this time to it.
Srnicek’s subject is the effect of digital technology on capitalism. He claims that “the platform” has emerged as a new business model and his aim is “to set these platforms in the context of a larger economic history, understand them as a means to generate profit, and outline some tendencies they produce as a result” (page 6). After a reasonably orthodox (if very obviously left-wing) review of economic and business trends since the 1970’s (primarily focussed on the USA and UK), he moves on to consider the emergence of “platforms”, which he defines as “digital infrastructures that enable two or more groups to interact” (page 43). He distinguishes five types of these: advertising platforms (e.g. the Google search engine), which allow their owners to extract information on users, undertake analysis, and use the product of this to sell advertising space; cloud platforms (e.g. Amazon Web Services), which comprise hardware and software that is rented out to digital-dependent businesses; industrial platforms (e.g. that of GE), which comprise the hardware and software necessary to transform traditional manufacturing; product platforms (e.g. that of Rolls Royce), which transform a traditional good into a service; and lean platforms (e.g. that of Uber), which are like product platforms but whose owners attempt to reduce their ownership of assets to a minimum.
The analysis of each of these business models is much the most interesting part of Platform Capitalism. Srnicek concludes, perhaps surprisingly, that lean platforms “seem likely to fall apart in coming years” (page 88) but he recognises that the other types of platform are here to stay. He sees some benefits in this (e.g. better products for customers) but his main focus is on the concerns to which the emergence of platforms gives rise.
His biggest concern is the perceived monopolistic tendency of platform capitalism. He returns to this on a number of occasions and asks “Will competition survive in the digital era, or are we headed for a new monopoly capitalism?” (page 94). This is certainly a question that needs to be addressed but, Srnicek’s analysis points to various factors that suggest that there will continue to be significant competition among the platform providers. Nonetheless, his prognosis is bleak. “Let us be clear,” he says, “this is ….. the concentration of ownership” and, he continues, “Far from being mere owners of information, these companies are becoming owners of the infrastructures of society” (page 92). This is surely unduly apocalyptic.
Srnicek’s other major concern relates to labour. It is here that his left-wing philosophy is most apparent. He points to some real concerns (e.g. the mis-labelling of employees as independent contractors with a view to avoiding employment protections) and he dismisses the absurd idea that user-created data comprises the exploiting of free labour. However, he makes many statements that rely on assumptions that are at best dubious. For example, his suggestion that “In a healthy economy [people such as Uber drivers] would have no need to be micro-tasking, as they would have proper jobs” (page 82) seems to be based on the assumption that the job market of, perhaps, 50 to 70 years ago is the only acceptable model and smacks of left-wing nostalgia for the days of manufacturing-based factory capitalism. Likewise, his suggestion that companies such as Airbnb have “off-loaded costs from their balance sheet and shifted them to their workers” (page 83) suggests preference for the rigidities of integrated corporate monoliths over the more flexible models permitted by modern technology.
The book also suffers in some places from loose use of terminology. For example, Srnicek several times mentions (with apparent disapproval) the “cross-subsidisation” that he believes is inherent in some platform business models (e.g. Googles) that involve providing a free service that enables advertising space to be sold. This use of the term is eccentric. Google is no more involved in cross-subsidisation than are the owners of commercial television stations or free local newspapers that have historically survived by selling advertising space. It is hard to see what is wrong with the Google “cross-subsidisation” model from a competitive or any other point of view.
More seriously, Srnicek’s frequent attacks on “tax evasion” are mis-directed. Many people are rightly concerned about tax evasion but he confuses illegal evasion with legitimate tax minimisation. In particular, he seems unaware that, pursuant to express US law, US corporations may legally avoid the payment of US tax on foreign profits for so long as these are not repatriated. He may not like the relevant US legislation but there is logic behind it and, in any event, companies can hardly be criticised for making use of it. His statement that “The leaders of tax evasion have …… been tech companies” (page 59) followed by a list of well-known names, without any supporting evidence, is both disturbing and disappointing.
The final section of the book (relating to what the future may hold) is less disturbing but equally disappointing. One idea is piled on another. In less than two pages, there are suggestions of: co-operative platforms; anti-trust action; regulation of, or even the banning of, lean platforms; co-ordinated action on tax; the creation of “platforms owned and controlled by the people”, which must nonetheless be “independent of the surveillance State apparatus”; “post capitalist platforms” (whatever they might be); and the collectivisation of platforms (pages 127/8). None of these ideas is explored and one may doubt the realism of at least some of them and the practical benefits of others.
This is a pity because there are many issues arising from “platform capitalism” that should be explored by both policy makers and those involved in business. What are the implications for privacy and, indeed, personal freedom and how should we respond to these? What kind of protections for “workers” are practicable and appropriate in a digital world? Where do the responsibilities of the platform companies to employees, customers, suppliers and others begin and end and how can they best discharge them? What kinds of regulatory regimes (if any) are needed for this kind of company and how can they be imposed in a digital, cross-border world? Generally, what does responsible digital business look like?
Srnicek fails to offer any insights into these matters. None-the-less, his analysis of the platform companies is important because it should help others to do so. It should also help all of us to note the way in which the business world is moving and avoid suggesting outdated solutions to modern business problems.
“Platform Capitalism” was first published in 2017 by Polity Press (ISBN 1509504869, 9781509504862), 120pp.
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.
