Markets and morality: Why you can't do economics without God

Professor Daniel Finn

Christians on the Left, the organisation for Christians in the Labour Party, holds its annual Tawney Dialogue this month. Named after prominent Christian Socialist RH Tawney, it aims to bring theology and politics together, with a senior politician responding to a contribution from a theologian. The result is a discussion that is deeply rooted and politically practical.

This year the theme is Economics for the Common Good. Daniel Finn, Professor of Theology and Clemens Professor of Economics at St John's University, Minnesota will speak. Labour's shadow chancellor, John McDonnell MP, will respond to Professor Finn's remarks.

Ahead of the Tawney Dialogue, Stephen Beer quizzed him about matters of theology and economy.

You are a professor of theology and economics. Has that brought particular challenges?

Both disciplines engage in serious arguments, but they differ in purpose, method, and standards of evidence, among other things. I recall my sense in graduate school that the short walk from one corner of a courtyard to the diagonally opposite corner, in order to move between the department of economics and the divinity school, actually entailed moving from one universe of meaning to another. The fascinating thing, both then and now, is that each has insights that the other could greatly profit from.

You have written in The Moral Ecology of Markets about how morality always plays a role in market construction, with the arguments about being where the moral bounds should lie. You offer a way in which people from different political perspectives can perhaps talk the same language. Have you seen any signs of this developing since the financial crisis and Great Recession?

There was a rush of soul-searching when the Great Recession arrived, but with each passing year the extent and depth of its pains recede from the public consciousness. I do think it has encouraged heterodox economists in their critique of the mainstream, and the pain itself, lingering for so many, has encouraged a more popular complaint about "the system." I have not seen much growth in the inclination of people to speak respectfully with their opponents. Separate from the Great Recession, each year sees a growing polarisation abetted by the silos that make up most of the universe of political conversation on the internet.

The financial crisis prompted a lot of soul searching. For a while it seemed that markets and morality might find each other again. Why do you think we have seen so little change?

There has long been a debate about whether ideas or interests are more powerful in our public life. Here, it seems to me that both have contributed to the lack of real change. Each person in both economics and politics seems to have an explanation of the "real" cause of the financial crisis that allows his or her intellectual perspective to remain largely unchanged. There is indeed insincerity in the world, but making this accusation against one's opponents is morally dangerous. We judge our own sincerity by the character of our intentions; we judge our opponent's sincerity by the effects of his actions, interpreted, of course, within our own world-view. The only solution for all this that I know of is for each of us to have careful conversations with people with whom we disagree.

Isn't a key problem that there is no alternative ideology, so political leaders and central bankers cling to the orthodoxy they know? If so, how can that change?

Thomas Kuhn famously argued that, even in science, a new orthodoxy is often resisted by older scientists, and consensus only arrives after the old guard retires.

JM Keynes argued that over the long term, ideas are more important than interests and that most men in their prime operate out of the mind-set they learned in school. Freidrich Hayek's conclusion was that believers in liberty must initiate a long-term effort to alter public consciousness to resist the pro-government tendencies of Keynesians and to rely instead on the initiative and judgment of individuals.

Over the past seven decades, his plan has to a large extent come to fruition. One might argue that no other philosophical perspective has gained more intellectual respectability, more adherents, or more political influence than has the individualism that Hayek endorsed.

Two approaches to morality were evident after the financial crisis. Some argued that the problem was with leadership and the ethical values of the investment bank trading floor. Others, usually on the Left, argued that it was the institutions and the systems that were the problem. Christians on the Left has long campaigned for separating investment from retail banking, for example. What is your view?

Concerning the banking sector, I agree completely that it is only prudent to require the separation of investment and 'retail' banking. Economists employ the notion of 'moral hazard' to describe a situation in which one person is tempted to take a significant risk knowing that he himself is protected against the risk because another person will incur the cost. This is why the law forbids you from taking out fire insurance on your neighbour's house. Without separating these two banking sectors, we face unacceptably high systemic risks.Both personal virtue and well-structured institutions are essential for human flourishing. Each is necessary and neither is sufficient by itself. Structures are powerful: if the CEO of one of the large investment houses had been struck in 2007 by moral lightning and become deeply concerned about justice and the welfare of all, he would have been replaced. Everyone in the financial industry was making huge profits and the board at his firm would insist on participating. At the same time, however, the personal moral convictions of a leader are also powerful. If this were not true, we would not care who, from the handful of most likely candidates, was appointed as our supervisor at work or elected to be prime minister.

We've asked you to talk about the common good. That is very much a Christian concept. How do you think we can talk about it to the wider world?

Most people, including many economists, make the fundamental mistake of assuming that the common good is simply the sum of the good of all individuals in a society.

The best definition of the common good was provided some 80 years ago by Virgil Michel, a monk of the Benedictine Abbey which sponsors the university where I teach. Father Virgil taught that there are two dimensions to the common good: the common conditions of social life and the attainment of the good life by everyone, at least to a minimum degree. Those common conditions include the systems that provide for us all: the educational system, the criminal justice system, the employment system, and other systems that provide parks and museums and transit. Much indebted to Thomas Aquinas, this view of the common good insists there can be no division between the individual good and the common good. It takes a lot of individual effort to maintain the common conditions necessary for human flourishing and our common effort to maintain them is part of our individual flourishing – and the whole point of those common conditions is that every person flourishes.

Politics seems in flux here in the UK, but we are also looking askance at the US at the moment! There is a lot of voter anger and frustration at the moment. How do you think it can be satiated? What do you think politicians on the Centre Left should do?

I am deeply embarrassed by what is going on now in the Republican Party, the party of Abraham Lincoln, arguably the finest statesman in the history of the United States. The anger and frustration, of course, are real and arise out of decades where ordinary people have not benefited much from the new wealth generated in their nation.

But I also have deeper and longer range concerns about the political culture in my nation (and I will let you decide whether this applies here in the UK). For decades now much that occurs in popular culture – suspenseful novels or television serials about national crises, movies about corrupt governments, and the like – have made heroes of rugged individualists who break the rules, engage in extra-judicial killing of the bad guys, and love their families. In short, classic values like the rule of law and the importance of a loyal opposition have given way to the conviction that "the other side" is so bereft of principles that our side need not worry about the arguments or tactics we use to undermine them. I am by both instinct and conviction an optimistic person, but I have deep worries about the decline of our civilisation.

What do you think the Christian politician should do in these times?

I look forward to the Tawney dialogue to hear an answer to this question from Christian politicians. I would make one suggestion, a kind of spiritual discipline: that each of us keep a list of four or five of the most reasonable people "on the other side" and each day read carefully something one of them has written that opposes one of our own deeply-held convictions.

Stephen Beer is Christians on the Left's political communications officer. He writes regularly on politics and economics. Twitter: @stephen_beer 

Lifestyle