Markets and Morality

The Archbishop of Canterbury on Capitalism

At the end of last month, the Archbishop of Canterbury (Justin Welby) gave a talk to a gathering of representatives of Anglican religious communities at Lambeth Palace. The Archbishop’s talk explained how religious communities, where lives of contemplation, prayer, community and charity are lived, are the source of renewal of the church. He then, citing Ricoeur the French phenomenologist, contrasts this approach with that of capitalism,

‘…the economic basis of exchange and  equivalence. That is what prevails in our society today, and by it we are all reduced to being homo financiarus or homo economicus, mere economic units whose purpose is consumption, whose destiny is extinction, and for whom any gain is someone else’s loss in a zero sum world. In that context prayer is loss, the blessing of the stranger, the widow and the orphan, the care for the poor, the imprisoned, the hungry and the sick, all are net loss.’

After a paragraph giving faint praise to Keynes, the Archbishop continued:

‘But his (Keynes’) view has been discredited and replaced by that of the Friedmanite exchange and equivalence which now dominates all of our thinking and even for those in this room too often our instinctive application.

‘But the Church has as its main task to live in this second world, and in so doing to live so as to convert the stale and barren darkness of the zero sum to the living abundance of grace in Jesus Christ.’

In a later passage the Archbishop quoted his predecessor (Rowan Williams) with evident approval:

‘To put it boldly, contemplation is the only ultimate answer to the unreal and insane world that our financial systems and our advertising culture and our chaotic and unexamined emotions encourage us to inhabit.’

These three passages reveal a gross misunderstanding of the world in terms both of economics and theology.

The argument of the first passage is starkly self-refuting. Exchanges are of course not zero-sum games, where my loss is someone else’s gain. Exchanges are not even the swapping of equivalents. If they both had the same value to each party, then there would be no reason for the exchange to take place (especially after transaction costs). In fact exchanges are particularly characterised by non-equivalence. If I exchange an apple for orange with you, then the orange is worth more to me than the apple and (vice versa) the apple is worth more to you than the orange. Zero-sum transactions in economic activity are limited (except in rare cases of extreme monopoly) to theft and charity. If I steal your orange I have it and you do not. My gain is your loss. In charity I give an orange to you, you gain and I lose. Stories about my gain in ‘psychic satisfaction’ can be disregarded. The Archbishop appears to deny the existence of such psychic gains, but of course he rightly accepts that we could and should do such acts anyway.

The Archbishop’s misunderstanding of the simple logic of exchange leads rapidly into further error. If the humdrum world of business where most of us live is really a form of institutionalised theft (my gain is your loss in every or most transactions) then it is hard to see how it can be so productive. One has merely to think of China where a form of capitalism (flawed like all human institutions) has taken hundreds of millions of people out of poverty in the space of 20 years. And consequently the Archbishop is wrong to criticise some in his audience for allowing ‘Friedmanite exchange and equivalence’ to dominate their thinking and making it ‘even for those in this room too often our instinctive application’. Tell that to the Chinese.

But the Archbishop’s talk exhibits a theological flaw. I remember once hearing a sermon in which the preacher explained that he attributed to an ‘oversight’ the singing of the hymn which includes the line ’…in this dark and dreary land’ (or some such, I forget). What he meant was this phrase appeared to deny the reality of the incarnation and God’s lively presence in the world. It was Enoch Powell who said that he gave thanks in church for the Holy Ghost’s gift of capitalism, by which our selfishness was transformed into the general good. In one moving passage in his talk, Archbishop describes his presence in a refugee camp in Goma, but I wonder if he pondered the thought that it was literally (and not just figuratively) providential that the rich countries have the wherewithal, provided by the ‘unreal and insane world’ of rough and ready capitalism, by which the suffering of the poor refugees could be eased.

There is a wealth of superior distaste and disapproval for businesses which employ financial institutions to raise money, manage their risks and use advertising to inform people of what goods they have for sale. As to ‘chaotic and unexamined emotions’ one wonders whether either Archbishop has considered how these are exhibited in the following activities: getting a mortgage, setting up a pension, changing a job, running a business, buying a house, buying shares, selecting a mobile phone, choosing a holiday, deciding how much to give to Oxfam (as opposed to Age Concern), and managing a budget. Rather than being the result of chaotic unexamined emotions, they seem to be decisions and choices which can easily exhibit prudence, foresight, charity, hope and other greater and lesser virtues. In any case both Archbishops appear to believe that ‘our insane and unreal world’ encourages people to make ‘unexamined and ‘emotional’ decisions. But on the contrary capitalism punishes the feckless and reckless who no doubt do make unexamined and emotional decisions. Of course it goes without saying that contemplation should play a greater role in the lives of everyone (including the author of this blog) but it is better prompted by individual failings than the flaws real or imagined in a free economy.

The Archbishop is not the first and will not be the last to rehearse the old chestnut about homo economicus. The term describes an analytical device and it is not intended to describe how people behave in real life or to prescribe how they ought to behave. It is worth noting that it is only in a free capitalistic economy, or what amounts to the same thing, a free society, that both selfishness and charity are possible. Without freedom for homo economicus, there can be no room for homo caritas. Indeed the religious communities to which he refers depend upon capitalist institutions such as private property

Finally one wonders whether the Archbishop might learn his economics from original sources rather than caricatures. Maybe he could supplement Ricoeur with Menger’s Principles or even Friedman’s Capitalism and Freedom.

4 thoughts on “The Archbishop of Canterbury on Capitalism”

  1. Posted 11/04/2014 at 16:32 | Permalink

    It is hard to see how ‘contemplation’ alone would have transformed living conditions for the better for so many millions in the past two hundred and fifty years. If one is generous, I suppose one could hope that the Archbishops mean well — but their preference for destroying capitalism seems like a recipe to make nearly everyone worse off. They almost seem to be nostalgic for the Dark Ages, when superstition reigned.

  2. Posted 11/04/2014 at 19:15 | Permalink

    He has a vested interest being a state employee.

  3. Posted 11/04/2014 at 21:04 | Permalink

    The Archbishop’s comments about economics are somewhat puzzling, given his previous career in business before his ordination to the clergy.

  4. Posted 20/05/2014 at 07:48 | Permalink

    I fear your preacher may have only heard the first line and not understood the rest of the hymn. The first two verses read:

    While in this dark and dreary land
    where sorrows oft assail
    let holy souls exalt their eyes
    to joys within the vail (sic).

    There sits enthroned the glorious Lamb
    while saints adore around,
    angels in shining circles round pay
    their homage most profound.

    Try Googling “dark and dreary land” and you get the full text in Hymnary dot org. The hymn may once have been popular, but it only appeared in two hymnals (possibly full score and text only versions), first in 1833, and then a later edition of the same in 1856.

    One may wonder how much the author (unknown) may have been inspired by Henry Bulwer-Lytton, auther of “Paul Clifford” (1830), the first line of which starts “It was a dark and stormy night”

    A “dark and dreary land” may have been descriptive of England in 1833 – one year after the Great Reform Act, and still affected by the waste of capital in the Revolutionary and Napoleonic wars.

    Novels published in these years include “Cloudesley” (Godwin) and “The Fortunes of Perkin Warbeck” (Mary Shelley), both 1830; “Crochet Castle” (Peacock) and “The Hunchback of Notre Dame” (Hugo) both 1831; “Bizarro” and “Castle Dangerous” (Scott) and “Eugene Aram” (Bulwer-Lytton) all 1832; and “Eugene Onegin” (Pushkin), “Ferragus, Chief of the Devorants” (Balzac) and “Sartor Resartus” (Carlyle) all 1833. No wonder the hymn writer referred to a “dark and drreary land”!

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