There is no greater source of muddled thinking than the relationship between religion and economic systems. Throughout the 18th and 19th centuries, most churches, established and free, Catholic and Protestant, condemned socialism root and branch. In the 20th century, most of them, in varying degrees, have condemned capitalism.
Indeed, many Christian theologians have gone beyond condemnation. Thus, as Father Richard John Neuhaus reminds us in his new book, Doing Well and Doing Good,1 the Protestant theologian Paul Tillich asserted flatly: “Any serious Christian must be a socialist.” And Tillich went further still:
Religious socialism calls the capitalist system demonic, on the one hand, because of the union of creative and destructive powers present in it; on the other, because of the inevitability of the class struggle independent of subjective morality and piety. The effect of the capitalist system upon society and upon every individual in it takes the typical form of “possession,” that is, of being “possessed”; its character is demonic.
Religious hostility to capitalism appears to spring from two sources. One runs very old and deep, arising from an apparent contradiction in the teaching of Moses in the Hebrew Bible. In the book of Deuteronomy, Moses stresses the links between affluence and moral worthiness. So long as Israel keeps the law, he says, God
will love thee and bless thee and multiply thee: He will also bless the fruit of thy womb, and the fruit of thy land, thy corn and thy wine, and thine oil, the increase of thy kine and the flocks of thy sheep, in the land which He swore unto thy fathers to give thee.
Israel, Moses continues, will indeed be wealthy, and “thou shalt lend unto many nations.” But, he adds significantly, “thou shalt not borrow.”
This apparent ban on borrowing at interest, without which all economic societies, except the most primitive, find it difficult to proceed, caused perennial difficulties for Jews and those of any faith based on Mosaic law. “Usury,” from the simple Latin usus, uti, to use, still has a sinister ring as a result of religious and popular censure, and still features in the vocabulary of political abuse.
In practice, of course, varying dodges were worked out by both Jews and Christians to get around the prohibition, and these received varying degrees of approbation from rabbis and priests. The Jews proved the more willing to rationalize money into a system of ethics. In the Middle Ages, religious philosophers like Maimonides and Nahmanides never made the assumption, so characteristic of the Christian intelligentsia, of an absolute distinction between book-reading and book-writing on the one hand and bookkeeping on the other. Defending Judaism in a religious disputation at Ferrara in 1500, Rabbi Abraham Farissol of Avignon broke through the difficulty by arguing that conditions had changed since biblical times and money was now a commodity like any other: if you hired it, of course you had to pay for its use, just as you paid rent for hiring a building or wages to a hired hand. Isaac Abrabanel, in a commentary on Deuteronomy completed in 1496, went further and insisted:
There is nothing unworthy about interest. . . . because it is proper that people should make a profit out of their money, wine, and corn. . . . Why should the farmer [who] received wheat to sow his field not give the lender 10 percent if he is successful, as he usually should be? This is an ordinary business transaction, and correct.
The more traditional Christian churches were slow to adopt this line of reasoning despite the huge expansion of the world economy in the 16th century. Not only Catholic but Lutheran writers continued to attack usury in any form until well into the 17th century. Calvin, on the other hand, argued that the prohibition in Deuteronomy was not universal but applied only to the Hebrews; for non-Hebrews, the only guide should be the Christian law of charity.
Calvinist pastors were under pressure to toe this line. In 1564-65, Bartholomew Gernhard of St. Andrew, Rudolstadt, was forced out of office for refusing communion to men who had loaned money at interest; and in 1587 at Ratisbon five preachers were expelled for insisting on preaching against usury. Protestant majorities in the English parliament approved lending at interest in 1545 and again in 1571.
Nevertheless, usury remained associated in many minds with extortion. Usury laws were not abolished in Britain until 1858 and in some U.S. states even later. These residual feelings surfaced again when capitalism fell into intellectual disrepute in the 1930′s, but now they combined with the second of the two factors I have mentioned: the rise of Protestant guilt.
From the mid-18th century onward, it came to be noted that the most successful trading nations were Protestant, and this impression spread during the first phase of the Industrial Revolution. In the 19th century it was quite commonplace to link industrialization and economic success with Protestantism, and it was also noticed that even in Catholic countries like France, Belgium, and Austria, the entrepreneurial lead had been taken by members of the Protestant minority. In the 20th century, sociologists and historians like Max Weber and R.H. Tawney attributed the rise of capitalism to specific religious notions, variously termed the “Protestant Ethic” and “Salvation Panic,” in which the desire to achieve righteous commercial success, as an external sign of godliness, became an engine of self-sustaining economic growth. Fear of Hell made men industrious, the argument ran, and therefore rich.
It was this theory, emphasizing as it did the identification of some forms of Christian teaching with the machinery of capitalism—had not the Dutch Calvinist Claude Saumaise argued in his treatise On Usury (1638) that charging interest was now necessary to salvation?—which helped to create those guilt feelings about entrepreneurial wealth-creation so marked, in our time, among many Christian leaders, theologians, and enthusiasts. And guilt, in its turn, bred a willingness to promote socialism as the most obvious alternative to capitalism.
Today, however, few historians would endorse the Weber-Tawney thesis. It is open to too many objections when applied to particular societies. For instance, few if any countries were more completely Calvinist than Scotland between 1560 and 1700, yet it is hard to demonstrate how the Reformation in any way favored the rise of economic individualism there. Quite the contrary: Scottish culture and economy began to flourish only in the 18th century when Calvinism, with its all-consuming demands, began to relax its grip.
What does seem to be true is that the progressive elements in a given society, which gradually became identified with the capitalist system, were marked not by adherence to any particular doctrine but by antipathy to highly institutionalized and clericalized Christianity of any kind. The common characteristic of these entrepreneurs—whose religious feeling was often intense but essentially private and personal—was their desire to be left alone by religious enthusiasts and organizers, and to escape from the clericalist and canon-law network. They thus tended to emigrate, and it was the act of movement, from restrictive societies to more relaxed ones, which liberated their energies and ingenuity.
All emigrant groups, indeed, tend to do better in new surroundings, a proposition which has been demonstrated again and again by the Jews. It is also confirmed by the whole history of the United States, where persecuted minorities, whether English Presbyterians and Quakers or Irish Catholics or, in our own day, refugees from Vietnam and Cuba, have swiftly achieved an affluence inconceivable in their homelands. The United States, with its freedom from clericalism and canon law, and its stress on moral as opposed to dogmatic theology, was the perfect setting for private as opposed to institutionalized religion to flourish, for the benefit of Protestants, Catholics, and Jews alike.
Greater appreciation for the complexities of the interaction between religion and economic growth has somewhat undermined Christian guilt feelings in recent years. Equally, the manifest failure of socialist systems to deliver reasonable standards of material well-being has undermined collectivism as an alternative. Against this background, Pope John Paul II’s encyclical on economic systems, Centesimus Annus (1991), was well-timed. Richard Neuhaus’s Doing Well and Doing Good is, in effect, a commentary on the contents and impact of that encyclical, and of the religious and political debate from which it emerged. So, too, is The Catholic Ethic and the Spirit of Capitalism, a new book by another well-known Catholic thinker, Michael Novak.2 It is especially useful to read these works together because they neatly complement one another, and the bifocal vision they offer is illuminating.
Neuhaus points out that Catholic views on the morality of rival economic systems are of increasing importance because Catholic countries like Spain, Portugal, the Philippines, Poland, Hungary, and Czechoslovakia have been among the most important beneficiaries of the waves of democratization which swept the world in the 1970′s and 1980′s. In this process, politics, economics, and Catholic teaching on individual rights have been inextricably mixed. The likelihood, therefore, is that prospects of full democratization, and of continued popular attachment to the Catholic interpretation of the Judeo-Christian ethic, will be strongly influenced by the ability of these economies to deliver the goods to ordinary people.
Unlike most clergymen who write on public affairs, Neuhaus is a punchy, no-nonsense writer, and his book is stoutly constructed. The first two chapters outline the way in which religious and moral teaching has influenced economic policy. Then Neuhaus devotes four chapters to the way in which the Catholic Church in particular has approached economic issues—a difficult subject, rich in misunderstandings, which he clarifies. After a chapter analyzing the Pope’s view of the significance of the revolutionary events of 1989 in Eastern Europe, he devotes his last five chapters to a close examination of Centesimus Annus and especially its implications for American policy issues.
Michael Novak ranges over a wider field. Novak’s writings on democratic capitalism have rightly earned him a world reputation—indeed, it is hard to think of anyone since Adam Smith who has single-handedly done more to portray the civilized and useful face of capitalism. In his new book, his aim is nothing less than to present the Catholic alternative to the Protestant Ethic.
Accordingly, the first part of The Catholic Ethic and the Spirit of Capitalism looks at earlier papal teachings on capitalist and socialist ethics. The second examines the work of John Paul II, both as a philosopher and an apostle of human freedom and as a moral commentator on economics. In the third part, Novak tries to show how these various teachings can help the world tackle the looming problems of racial tension and mass poverty in the 21st century.
But let us focus on one central issue where Neuhaus and Novak bring somewhat different perspectives to bear. The point in John Paul’s thinking which Neuhaus seizes on most eagerly is that there are really two understandings of capitalism. One of them merely recognizes
the fundamental and positive role of business, the market, private property, and the resulting responsibility for the means of production, as well as free human creativity in the economic sector.
The second appreciates that the enormously powerful forces thus unleashed have to be
circumscribed within a strong juridical framework that places it at the service of human freedom in its totality and that sees it as a particular aspect of that freedom, the core of which is ethical and religious.
John Paul insists, and Neuhaus agrees, that the first understanding of capitalism has to be rejected. The second is not merely acceptable but in a sense unavoidable because there appears no other way in which sufficient wealth can be ethically created to address the world’s problems. Neuhaus deals in some detail with how the Pope believes capitalism can be rendered institutionally ethical. His book is a plea that all those in the Judeo-Christian tradition, but especially America’s Catholics, should seize the opportunity, as he puts it, to “cultivate the spirituality of enterprise.”
Novak addresses himself more directly to what this “Catholic Ethic” entails. He endorses the need to circumscribe entrepreneurial energies by an enlightened corset of law, but he also draws attention to the enormous potentialities—as he sees them—of capitalism itself. Though he admits that capitalism is “not even close to being the Kingdom of God,” that it is not a religion or even a philosophy instructing mankind how to live, nevertheless,
compared to socialist and traditional cultures,. . . . its institutions do set a higher moral standard, and do insist on certain basic moral habits. Up to some low threshold, then, it is a way of life, and not merely a neutral technique. . . . Its inner form, though this-worldly, springs from inspirations derived in good measure from Jewish and Christian sources. And this historical form is subject to further specification by a more perfect practice of Christian and Jewish life.
This is a very bold and challenging statement. I am delighted that someone of Novak’s force and eminence should have made it, because such a proposition, for which he argues cogently in his book, ought to be widely debated. But I do not agree with it, and I suspect it is open to the same objections as the (admittedly more arrogant) statements by Tillich and others that good Christians—some would say good Jews, too—must be socialists.
Perhaps it is a pity that the word “capitalism” ever came into general use. It is in fact a fairly late invention: “capitalist,” a man who habitually employs sums of money for investment, is a much older coinage, but “capitalism” is misleading. It implies a deliberately conceived set of beliefs put together at a specific date to achieve a predetermined purpose. But no such thing ever happened. No one invented the thing. In a reasonably free society, such a system is likely to emerge at a certain stage of economic sophistication, and is the cumulative work of many thousands of anonymous individuals operating to further their self-interest. Only afterward does a clever analyst like Adam Smith come along to explain what has happened. Lord North went to his grave without realizing that he had, as England’s Prime Minster during the early years of the Industrial Revolution, presided over the world’s first “economic miracle.”
In short, “capitalism” is an organic process, springing from human nature and ingenuity, and will occur of its own accord unless positive steps are taken to prevent it—unlike socialism, which has to be deliberately organized and imposed. It is thus a fundamental error to see capitalism and socialism in ideological symmetry; they are quite different phenomena. You can indeed assess the ethical merits of socialism, and pronounce a verdict on it. But capitalism itself has no more human values than a computer or an account book: its morality resides in the people who operate it.
And that is why Novak is right, I believe, to argue that in any country,
the more closely attuned to Christian and Jewish faith that its citizens become, the better democracy, capitalism, and pluralism should function.
This looks at first glance like a truism, but it is not. Capitalism is a morally neutral force (in my judgment), but I doubt whether it can function effectively without some energizing from all of the seven deadly sins except sloth. In a godless society, lacking the systematic moral education which organized religion provides in families and schools, and the regular practice of religious duties, we are therefore bound to get the first kind of capitalism against which John Paul II and Neuhaus warn us. To put it crudely, capitalism will tend to be bad if there is a predominance of bad capitalists.
On the other hand, in a godly society—not a moral utopia, of course, but one where the Judeo-Christian ethic finds strong public and private expression—capitalism is a wonderfully creative force. I stress “creative” because, thanks to the writings of men like Novak and Neuhaus (building on the original insights of George Gilder in particular), we are beginning to realize that there is no essential difference in creativity between writing a symphony or epic poem and building a successful business which supplies a useful product and gives honest employment to thousands. I wish children were taught this in school, and students in universities. (Of course, entrepreneurial activity can do harm, but so can the thoughts of a great creative artist like Tolstoy, that harbinger of Soviet collectivism.)
The sheer creativity which capitalist techniques make possible fits in particularly well with God’s promises to Moses in the passage from Deuteronomy I have quoted. The divine plan was indeed that we should enjoy the fruits of the earth and of our own industry, and capitalism is the best way we have yet devised to organize the latter. But it was equally the divine plan that God should be worshiped and obeyed and, not least, feared. The fear of the Lord, in short, is the beginning of capitalist wisdom, as of any other kind.
1 Doubleday, 312 pp., $22.00.
2 Free Press, 334 pp., $24.95.