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To Serve God or Mammon?

The Dialogue between Theology and Economics

You cannot serve both God and money (Mt 6:24). The biblical warning points to a paradox underlying Western culture. Rooted in a Judeo-Christian tradition rife with admonitions to avoid excessive materialism and to practice economic justice, the Western world nonetheless has given rise to the set of institutions we might loosely refer to as capitalism.1 The expanding reach of markets, first within the nation-states of Western Europe and North America and then throughout the world through the process of globalization, has allowed billions of people to enjoy improved standards of living, longer life spans, and better education.2 Yet capitalism continues to be subject to critiques reflecting the biblical admonitions. Does it promote a culture that is excessively materialistic? Does it depend on or even deepen the problems of poverty and economic injustice? Nor are such critiques the sole province of religious believers. Secular and even atheist voices have raised them.3 Nonetheless, the tension between the Christian suspicion of excessive wealth and greed and the workings of the global market economy particularly demands a theological response.
Such a response has not been in short supply. Most notably, the magisterium of the Catholic Church has issued a series of encyclicals and pastoral letters on the vexed subject of how to weigh the goods produced by the spread of capitalism against the moral evils that seem to accompany it.4 Individual theologians across denominations have likewise tackled the subject, with responses ranging from an embrace of capitalism to a radical rejection of it.5 Haunting these responses, both theological and secular, is the difficulty of finding a language that can bring moral concerns to bear on markets that obey the logic of profit seeking. Without a bridging language, ethical or theological critiques seem to be a matter of imposition on the market—an argument that we should curtail or limit the market’s natural functioning.6
Charles Taylor offers a good initial description of the situation, suggesting that we live in a secular age in which “as we function within various spheres of activity—economic, political, cultural, educational, professional, recreational—the norms and principles we follow, the deliberations we engage in, generally don’t refer to God or to any religious beliefs; the considerations we act on are internal to the ‘rationality’ of each sphere—maximum gain within the economy, the greatest benefit to the greatest number in the political arena, and so on.”7 The resulting fragmentation undergirds our sense that ethical language is alien to economic thought. Yet there can be no coherence to a society if that fragmentation is complete. And, in point of fact, one can argue that the discourse of economics has come to dominate the public sphere, supplying it with a normative framework.8 Indeed, as A. M. C. Waterman documents, theology played that role until it was displaced by economics in the early nineteenth century.9 Economic considerations now decisively shape conversations in the public square. Consider, for example, political rhetoric about education, which seldom touches on its role in forming good citizens but rather dwells on the role of education in promoting economic growth and ensuring that young people gain the skills that will allow them to compete effectively in the economy.
The elevated status of economic concerns in modern culture is at once understandable and problematic. It is understandable that a liberal pluralistic culture would order its public discourse around questions of ordinary human flourishing. The inability to achieve a shared understanding of the higher goods a society might pursue leads naturally to the thought that we should collectively work to ensure that the means for pursuing private understandings of the higher good are broadly and abundantly available.10 Yet it is problematic because once the public square is shaped around the shared goal of achieving prosperity, the instrumental character of prosperity becomes obscured. We forget to ask what our material wealth is for and often end up sacrificing more important human goods for the sake of greater income. The resilience of critiques about the excessive materialism and injustice of modern market economies reflects the incoherence of a society that de facto treats the instrumental good of economic prosperity as the highest common good.
Because economics itself cannot provide a framework that orders economic flourishing to the higher ends economic flourishing should serve, discourses that directly consider the way goods should be ordered are needed if we are to think intelligently about the ethical implications of market economies.11 Theology is one such discourse. A theological economics is, of course, of immediate interest for believers who worry about how to reconcile their economic pursuits with their faith commitments. But it is of more general value insofar as it serves as a reminder that some comprehensive framework is necessary if we are to remember that wealth is meant to serve us and not to be our master. Theological economics at least raises the big questions of the proper function of economics in a good society, and thus it should be a useful starting point for broader conversations about how to integrate the various spheres of our lives. Yet theological economics has had difficulty gaining traction.

The Fundamental Dilemma of Theological Economics

For theological ethics to do its job properly, theology would need to be the dominant partner. That is to say, if it is to be the discourse that allows us to think about how the good of economic flourishing is to be related to other goods, such as justice or goods threatened by excessive materialism, it needs to be the discourse that determines how to make sense of economic claims. Yet by almost any measure, economics enjoys greater prestige and correspondingly has a greater impact on public discourse than does theology.
One measure of the relative standing of the two disciplines is that theologians who wish to comment on economic matters need to respond to the discipline of economics, whether to affirm, modify, or reject its claims. The reverse is not true of economists who wish to think about matters touching on religion. In his survey of the subdiscipline of the economics of religion, Lawrence Iannaccone describes the field as consisting of three main branches: the analysis of religious behavior using microeconomic theory; the study of the economic consequences of religion (for example, Max Weber and R. H. Tawney); and religious economics, which is the literature I am calling theological ethics. Because Iannaccone’s survey is directed to economists who want a general overview of the field, he focuses on the first branch, briefly discusses the second, and omits the third on the grounds that “its literature is broad and far removed from the research and professional interests of most economists.”12 In other words, the economic study of religion can proceed without any acquaintance with, much less as a response to, theology. Nor do economists in general need to take any note of theological criticisms of economics—it is an ignored branch of a subdiscipline in economics that has only recently emerged and is itself quite marginal to the field as a whole. In sum, theologians have to listen to economists, while most economists do not listen to theologians at all.13
There are many reasons, some of them quite good, for the relative status enjoyed by economics. Most obviously, economists are experts in the sort of rationality deemed appropriate for the economic sphere. But the core difficulty in bringing theological reflection to bear on economic matters is the one first articulated by Niccolò Machiavelli in the sixteenth century: “Since my intent is to write something useful to whoever understands it, it has appeared to me more fitting to go directly to the effectual truth of the thing than to the imagination of it. And many have imagined republics and principalities that have never been seen or known to exist in truth; for it is so far from how one lives to how one should live that he who lets go of what is done for what should be done learns his ruin rather than his preservation.”14 We can talk all we want about virtue and what should ideally be the case. But in this world if you want to make things better, it is just more practical to accept humans as they are and go from there.15 That is the economic project in a nutshell.16
Economists see themselves as dealing with the effectual truth of things, which for them takes the form of constructing models that accurately predict human behavior. It is true that economists are widely criticized for their unrealistic model of humans as homo economicus, an individual who rationally weighs up costs and benefits in pursuit of achieving his own ends.17 Economists have long rebuffed such criticism by relying on Milton Friedman’s classic defense of the use of “unrealistic” assumptions. The aim of economic science is to predict human behavior. As long as the models predict well, they are useful models.18 Indeed, the interest in predictive value can be seen in the fact that economists are happy to incorporate a richer set of assumptions about human behavior into their models, so long as doing so generates better empirical results. The rapid rise in experimental economics in the last few decades, for example, is owing to the fact that models that account for cognitive biases or the impact of norms such as fairness on decision making offer good predictions.19 Economists thus present themselves simply as pragmatic realists, an appealing stance to take in a pragmatic culture.20
Although economic models can incorporate a wide array of motivations, it is true that they often emphasize self-interest. For many, this is just a matter of common sense. It seems self-evident that people prefer high-paying jobs to low-paying jobs, for example. A core corollary of the thought that people pursue their self-interest is that they will respond to incentives in predictable ways. If you want to discourage gasoline consumption, tax it. If you want to encourage investment in education, subsidize it. As Michael Sandel documents, the use of the word incentivize has exploded in the past few decades.21 Yet if economists’ primary contribution to human knowledge were their understanding of the way incentives shape behavior, we would still be left with the worry about how to promote social goods in a society of people driven primarily by self-interest. The Machiavellian turn to realism is only pragmatic if it can somehow be turned to good results.
But as it turns out, the real power of economics lies not just in its hard-headed realism about human nature but also in its reassuring insight that markets can channel self-interested or even outright selfish behavior into socially desirable outcomes. This is, of course, just Adam Smith’s famous insight that “it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from regard to their own interest.”22 The butcher seeks to make money. He does so by offering quality meat at good value. If he fails to do this, his customers will go elsewhere, and he will go bankrupt. Even better, in vying with one another for business, the butcher and his competitors will work to find better and cheaper ways of providing meat. Markets thus spur self-interested people to work hard and to innovate. In addition, the price mechanism turns out to coordinate the behavior of all these self-interested individuals more efficiently than could a benevolent social planner.23 It is for these reasons that the spread of markets has been associated with a historically unprecedented widespread rise in standards of living. Economists thus present the attractive proposition that realism about human nature “as it is” can actually lead to better outcomes than we could get by simply urging people to be more virtuous.
Nor have economists rested on Adam Smith’s crucial insight. They have gone on to rigorously investigate the question of what assumptions need to be in place to secure the claim that markets generate socially beneficial outcomes. In what is known as the first fundamental theorem of welfare economics, the economists Kenneth Arrow and Gerard Debreu have shown that under perfect competition, the market is efficient, where efficiency is taken to be a measure of a socially good result.24 Chapter 2 takes up the question of whether efficiency is a good measure of social outcomes, but for now it is worth noting the contribution of this sort of work. Because the result rests on some strong assumptions about the nature of perfect competition, it provides a framework for thinking through the conditions in which the market works well and also the conditions in which the market can fail. Although economists have more respect for the workings of markets than do many noneconomists, they have also given us a vocabulary for naming the many forms of market failure: externalities, monopolies, public goods, asymmetric information, and so on. There are lively debates within the profession about the extent of market failures and the ability of the government to intervene to help markets function better. Economists thus have standing because they are positioned to contribute intelligently and pragmatically to some of the key public policy debates of our day, with an apparatus that does not automatically align them with one political viewpoint or another.
In addition to economists’ realism about the impact of incentives on human behavior and their pragmatic assessment of the role of institutions and policies in guiding that behavior toward good social outcomes, economics resonates with the culture in important ways. We value individualism and autonomy. Economists model human behavior as individual choice. We associate scientific knowledge with that which can be quantified and empirically tested. Economists use mathematics and statistics extensively in their work. And as noted above, as a result of pluralism we treat economic prosperity as the shared good that should orient our political discourse. That naturally lends prestige to the discipline that studies the economy. Although economists can and do disagree about many things, they maintain a shared commitment to an approach to understanding human nature and the workings of the economy that reflects and amplifies some of the core orientations of our culture.
As appealing as Machiavellian pragmatism is, however, it cannot give us a complete account of the human situation. The moral critiques that have haunted both capitalism and the discipline of economics have persisted over the past few centuries. That sense of misgiving became acute in the wake of the financial crisis of 2008, which issued in a widespread cry for moral engagement with the economy. Indeed, judging from the outpouring of books on the subject by prominent economists, that need is felt even within the profession of economics.
Thus, for example, Thomas Piketty’s weighty tome on excessive income inequality became a surprise best seller in 2013 and widely shaped public discourse.25 Nobel laureate Joseph Stiglitz, a progressive economist, likewise railed against rising income inequality, taking especial aim at the problem of crony capitalism plaguing the United States.26 Crony capitalism was subject to critique from the right as well, as exemplified by Chicago economist Luigi Zingales’s book A Capitalism for the People.27 Noble laureates George Akerlof and Robert Shiller extended ...