For millennia there has been a debate about whether there is a conflict between making a profit and faith. Is it, for instance, moral to charge interest rates or is lending exploitation of the poor? To put it more simply, can you be wealthy and spiritual at the same time or do you have to lead a life of austerity to be spiritual?
The Easter weekend provides an opportunity to reflect again on these wrenching topics, on what is important to us and what really matters. Last year, demonstrators on Wall Street and outside St Paul’s Cathedral in London protested against what was seen as unacceptable capitalist behaviour, especially by the banks. This may have quietened down, but the core issues have not been solved.
While there is something to be said in favour of living simpler lives, there is no conflict between faith and turning a profit. It is fine to make a living; we are meant to enjoy abundant lives. The conflict comes when we separate ethics and economic progress and when we equate the latter with happiness.
To be clear, capitalism per se is not at fault. The most appealing thing about capitalist theory is the freedom for the individual. But as Milton Friedman wrote, while we are free to choose, we should not be free to deprive others of their freedom.
At issue is not the rate of interest or the size of the mansion we inhabit. What matters is that we understand how we should behave to one another: namely, following the Golden Rule, that we should treat others as we would have others treat us. So we have to do better at stemming the abuses of capitalism, whether environmental decline from corporate malpractice or the abuse of workers in supply chains for goods that we all love to own. Shareholder responsibility is not only to make profits. How they are made also matters.
We now know, through various studies, that while gross domestic product has increased in the west in recent decades, happiness has not. We cannot worship money and our self-interest alone – it leaves us with a hunger that can never be satisfied by acquiring more goods.
Does this mean we should not enjoy all the earthly riches and goods? No. Enjoy them. Earn them. It is a misconception that one has to be poor to be spiritual, and that hard work should not be rewarded. What is important is finding the balance between greed and having enough, and defining what a joyful life means to us.
We all have the potential to feel that “more money is never enough”, particularly when we see vast banking bonuses. But how much do we really need, and what really makes us happy? Then there are the imperatives of “keeping up with the Joneses” and what the economist Thorstein Veblen called conspicuous consumption. Hard as it can be, we should not worry about what others think.
So how are we to correct the negative traits of capitalism? A Robin Hood tax, or Tobin tax, has been suggested. Yet there is a risk that such a tax is more likely to hit investors than banks. And it is not yet clear how it would discourage risky behaviour by banks.
We cannot tax ourselves out of this and hope that this will solve the problem because we are not addressing the root cause of the behaviour. We are in self-denial because we are treating the symptoms, not healing the patient.
One important step would be for investors to start to demand a wider range of socially responsible investment products and challenge fund managers to seek better returns. They can demand transparency and be opposed to highly leveraged products that do not actually produce anything useful for the common good.
Harder to effect, but important, is for bankers to move away from the mindset of Gordon Gekko, and the idea of taking someone else’s money and not being responsible for it. In an ideal world, of course, they would offer advice that serves clients’ best interests and long-term financial security, rather than that which earns bankers and traders the highest short-term commissions. Banks and their shareholders can help address this by pushing to reform the incentive structure rather than wait for state regulators to bring in new rules.
Companies can improve corporate social responsibility, so it is no longer just a “nice thing to do” but rather an integral part of daily practice. We can all start to even out inequality through philanthropy.
So we can earn a living through capitalism, not by profiteering but by genuinely servicing others and in the process of producing a profit we can do no harm. Everyone can help to make the world a better and fairer place. Indeed, every human is made for goodness – yes, even bankers.
The writers are the former archbishop of Cape Town and the chief executive of Not Just for Profit
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