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FAITH,
FINANCE,
AND
ECONOMY
BELIEFS AND
ECONOMIC WELL-BEING
Edited by
Tanweer Akram · Salim Rashid
“The connections between faith and nance are fundamental for a ourishing
economy, as every banker and policymaker should know. Given the challenges of
global nance in this century, however, one wonders how faith may succeed in
confronting the inequalities and injustices that arise? It takes scholars from differ-
ent faiths and disciplines to analyze and solve these problems. The essays in this
volume give readers hope that faith, deeply understood, can overcome the intrin-
sic dilemmas of nance, even on today’s global scale.”
—Larry D. Neal, Professor Emeritus of Economics,
University of Illinois at Urbana-Champaign
“The authors of this important volume of essays wrestle with questions such
as: What is the best arrangement for creating wealth and reducing inequality
and poverty? How does God, as interpreted by several major faiths, want soci-
ety organized so that the economic system allows all humans to ourish? Is lib-
erty compatible with inequality in income and wealth? Can humanity manage
the juggernaut of rampant consumerism? What foundational contributions to
Economic Development were made by Anglican Clergymen such as George-
Berkeley, Josiah Tucker and Jonathan Swift? What does Islamic nance offer in
the area of ethical investments and modern-day nance? How have modern cor-
porations navigated issues of faith in the workplace? Finally, what is meant by
‘moral ecology’ as practiced in Catholic social teachings? One hopes the book
will be widely read by students of religion, economics and business for a better
understanding of our world.”
—Munir Quddus, Dean of the College of Business,
Prairie View A&M University
“A comprehensive study of economic life and ideas in modern society cannot
ignore the religious culture in which they occur. This highly interesting collec-
tion of essays is a valuable contribution to that study.”
—A. M. C. Waterman, Professor Emeritus of Economics,
University of Manitoba
Faith, Finance, and Economy
Tanweer Akram · Salim Rashid
Editors
Faith, Finance,
and Economy
Beliefs and Economic Well-Being
Editors
Tanweer Akram
Thrivent
Minneapolis, MN, USA
Salim Rashid
Emeritus Professor, Department
of Economics
University of Illinois-Urbana
Champaign
Urbana, IL, USA
University Professor
East West University
Dhaka, Bangladesh
ISBN 978-3-030-38783-9 ISBN 978-3-030-38784-6 (eBook)
https://doi.org/10.1007/978-3-030-38784-6
© The Editor(s) (if applicable) and The Author(s) 2020. This book is an open access
publication.
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v
Preface
Faith and nance may appear at rst glance to be two different and dis-
connected subjects. However, this book shows the deep and intricate
connection between faith and nance in different countries, societies,
and eras. This book is addressed not just to economists, investment pro-
fessionals, theologians, and philosophers, but also to the public as well as
policymakers.
Faith, Finance and Economy is an edited volume consisting of chapters
written by scholars from many academic disciplines, including theology,
philosophy, history, law, economics, and business. While the scholars rep-
resented in the book do come from a variety of philosophical perspec-
tives, they share a common interest in the connections between faith and
nance. The chapters are based on papers that the scholars presented
at a conference that was organized and sponsored by Thrivent and
held on July 24, 2018 at the University of St. Thomas in Minneapolis,
Minnesota. It was a pleasure for us to work with these scholars. We thank
them for their contributions and many convivial conversations.
We also thank Thrivent for organizing the conference and supporting
the publication of this book. We also thank the following for their sup-
port for many different aspects of this book: Callie Briese, Brad Hewitt,
Karen Himle, Ann Jonell, Rick Kleven, Chris Kopka, Joanna Reiling
Lindell, William B. McKinney, Samantha Mehrotra, Mary Rafferty,
Teresa J. Rasmussen, Joan Rushton, Jim Thomsen, Mark Wagner, and
two anonymous referees. We also appreciate the efforts of Elizabeth
Graber, Sophia Siegler, and other staff of the publisher in copyediting
and typesetting, and in performing various tasks that were essential to
getting this book published.
The standard disclaimers apply. The authors’ institutional afliations
are provided solely for identication purposes. Views expressed are solely
those of the authors and are not necessarily those of Thrivent, Thrivent
Asset Management or any afliates.
Minneapolis, USA
Urbana, USA
November 2019
Tanweer Akram
Salim Rashid
vi PREFACE
vii
contents
1 Introduction 1
Tanweer Akram and Salim Rashid
2 Christian Faith and Economics 15
Ronald J. Sider
3 Biblical Stewardship and Economic Progress 31
Anne Rathbone Bradley
4 Rationality and Alienation: Themes from Gandhi 53
Akeel Bilgrami
5 Consumerism in Contemporary China 75
Karl Gerth
6 Anglican Christians and Modern Political Economy 107
Salim Rashid
7 Islamic Finance, Consumer Protection
and Public Policy 129
Faisal Kutty
ix
notes on contributors
Tanweer Akram is Director of Global Public Policy and Economics
at Thrivent, USA. He is responsible for developing the rm’s views on
international nancial regulations. He also conducts research on global
macroeconomic trends, outlook, and risks. He has published extensively
in economics and nance journals.
Akeel Bilgrami is Sidney Morgenbesser Professor of Philosophy at
Columbia University, USA, where he is also on the Committee on
Global Thought. He was the director of the Humanities Center at
Columbia University for seven years and is currently the director of its
South Asian Institute. His publications include the books Belief and
Meaning, Self-Knowledge and Resentment and Secularism, Identity, and
Enchantment. He is due to publish two short books in the near future:
What Is a Muslim? and Gandhi’s Integrity.
Anne Rathbone Bradley is Academic Director for The Fund for
American Studies, USA and Vice President of Economic Initiatives at the
Institute for Faith, Work & Economics. She is Professor of Economics
at The Institute for World Politics and Grove City College. She is also
a Visiting Professor at Georgetown University and George Mason
University. Dr. Bradley is the coeditor and author of Counting the Cost:
Christian Perspectives on Capitalism, For the Least of These: A Biblical
Answer to Poverty, and Be Fruitful and Multiply: Why Economics Is
Necessary for Making God-Pleasing Decisions.
Heath W. Carter is Associate Professor of American Christianity at
Princeton Theological Seminary, USA. He is the author of Union Made:
Working People and the Rise of Social Christianity in Chicago. He is also
the coeditor of three books: The Pew and the Picket Line: Christianity
and the American Working Class, Turning Points in the History of
American Evangelicalism, and A Documentary History of Religion in
America. Dr. Carter is currently working on a new book entitled On
Earth as It Is in Heaven: Social Christians and the Fight to End American
Inequality.
Karl Gerth is Hsiu Endowed Chair in Chinese Studies in the
Department of History at the University of California, San Diego,
USA. Earlier he taught at the University of South Carolina and Oxford
University. His latest book, As China Goes, So Goes the World: How
Chinese Consumers Are Transforming Everything, explores whether
Chinese consumers can rescue the economy without creating even
deeper global problems. His rst book, China Made: Consumer Culture
and the Creation of the Nation, examines the connections between
nationalism and consumerism in China in the rst half of the twentieth
century.
Faisal Kutty is Associate Professor of Law, Emeritus at Barry University
Law School, USA and at Osgoode Hall Law School of York University in
Toronto, Canada. He serves as counsel to KSM Law, a law rm that he
cofounded. He has acted as legal counsel to various Islamic nance com-
panies. His research and teaching interests include Islamic law, Islamic
nance, religion and law, international law, human rights, comparative
law, and national security.
David W. Miller is Director of the Faith & Work Initiative, Lecturer
of Religion, and Professional Specialist at the Center for the Study of
Religion, all at Princeton University, USA. He also serves as an advisor to
corporate CEOs and senior executives on ethics, values-based leadership,
culture change and the role of faith at work. Prior to academia, David
lived and worked in London for eight years, where he was a partner in a
private equity rm that specialized in international investment manage-
ment, corporate nance, and mergers and acquisitions.
Michael Naughton is Director of the Center for Catholic Studies at the
University of St. Thomas, Minnesota, USA. He holds the Koch Chair
in Catholic Studies and is a full professor in the department of Catholic
x NOTES ON CONTRIBUTORS
Studies. Professor Naughton is author, coauthor and coeditor of nine
books and more than 50 articles. He helped coordinate and write the
Vocation of the Business Leader issued by the Pontical Council for
Justice and Peace. His most recent coauthored book is Respect in Action:
Applying Subsidiarity in Business. He is also the coauthor of Managing as
If Faith Mattered.
Salim Rashid is Professor Emeritus at the University of Illinois, Urbana–
Champaign, USA and University Professor at East West University,
Dhaka, Bangladesh. He has published in the areas of mathematical eco-
nomics, economic methodology, monetary economics, economic devel-
opment, and the history of economics. His current interests are in the
areas of religion and economic development and the limitations of math-
ematical methods in economics. After retiring he taught in Fiji, India,
and Malaysia. He visits Bangladesh regularly to advance the cause of rural
urbanization as a means to achieve 10% economic growth.
Ronald J. Sider is Distinguished Professor Emeritus of Theology,
Holistic Ministry, and Public Policy at Palmer Theological Seminary,
USA and President Emeritus of Evangelicals for Social Action. In 1982,
The Christian Century named him one of the twelve “most inuential
persons in the eld of religion in the U.S.” His book, Rich Christians in
an Age of Hunger, was recognized by Christianity Today as one of the
100 most inuential religious books of the twentieth century. He was the
publisher of PRISM magazine and a contributing editor of Christianity
Today for 20 years. He is a contributing editor of Sojourners.
NOTES ON CONTRIBUTORS xi
CHAPTER 1
Introduction
Tanweer Akram and Salim Rashid
How can the abacus be combined with that which cannot be crushed in
the crucible or weighed in the balance? And yet, such is the paradoxi-
cal attempt of this volume on Faith, Finance, and Economy. Since book-
keeping arithmetic is coolly amoral about profits and losses, to persuade a
mercantile age that faith may exert any influence on finance, we need to
argue in terms with which merchants are familiar. It must be shown that
either the demand or the supply of finance can be shifted by those who
are guided by the unseen.
Once one starts looking, however, the evidence seems so plentiful that
one is led to wonder how people could have thought otherwise. The
“transcendent importance” of religion and faith is obvious if one looks
T. Ak ram (B)
Thrivent, Minneapolis, MN, USA
S. Rashid
Emeritus Professor, Department of Economics, University of Illinois-Urbana
Champaign, Urbana, IL, USA
e-mail: srashid@illinois.edu
University Professor, East West University, Dhaka, Bangladesh
© The Author(s) 2020
T. Akram and S. Rashid (eds.), Faith, Finance, and Economy,
https://doi.org/10.1007/978- 3-030-38784-6_1
1
2T. AKRAM AND S. RASHID
carefully.1Long-distance trade between the Mediterranean nations and
India took place with generations of merchants who had contacts in major
ports and who began letters with the significant expression of trust: “I am
in your place as you are in mine.” The earliest successful banks of Italy
were run for profit, but their profits were submitted to a charitable trust.
In the city where Thrivent is located, Minneapolis–St Paul, the wealthi-
est merchants got together soon after they achieved success and agreed
to dedicate 10% of their profits to the community. Because it is not—in
their nature—noisy or flashy, faith-based initiatives run as a subterranean
stream beneath the hubbub of civilization. We are still coming to a full
understanding of the ways in which faith suffused the commercial life of
the West for a thousand years. This volume is an attempt to show the con-
ceptual richness of the framework that seeks to leaven finance with faith,
the effectiveness of the synergy, and the pitfalls it encounters in practice.
The rest of this introduction provides a guide to the objectives of
this book and its sponsors, and a brief guide to its contents. After that,
we flesh out in brief a general schema within which the general societal
impact of faith and finance can be understood.
The Objectives of This Book
The main objective is to foster a multidisciplinary and multireligious
understanding of the ties among faith, financial intermediation and eco-
nomic progress, drawing on research in economics, finance, history, phi-
losophy, ethics, theology, public policy, law and other disciplines. This
collection of essays is meant to show the importance of religious engage-
ment with finance to the general public. The collection of essays provides
many different examples of this connection rather than develop a single
theme.
In July 2018, Thrivent organized a conference—held at the Univer-
sity of St. Thomas in Minneapolis, Minnesota—on the topic of faith
and finance. Thrivent was solely responsible for financing the confer-
ence. The conference brought together some of the leading scholars and
thought leaders on major world traditions from a range of academic insti-
tutions. This book, based on the papers presented, is an outcome of the
1Whitehead Alfred North (1996 [1926]). Religion in the Making.NewYork,NY:The
Free Press.
1 INTRODUCTION 3
conference. This book is meant for a general audience, for the reader
curious about the intersections of faith and finance.
A critical exchange of ideas about faith and finance is useful not
only to scholars but also to policymakers, entrepreneurs and commu-
nity members. Understanding the connection between faith and finance
is relevant for contemporary policy debates about business development,
entrepreneurship, the role of not-for-profits in community development
and the missions of faith-inspired organizations in an ever-changing
world. Indeed, it is even relevant for issues of corporate culture/ethics,
the role of leverage, the remuneration of talent, and a host of other issues,
as will be discussed in the chapters that follow. The conference was not
designed to achieve an integration of different viewpoints but rather to
explore different perspectives and experiences regarding the multiple con-
nections between faith and finance. The overall aim is to convince the
reader that faith and finance are not disjoint entities.
Some Information About Thrivent
Thrivent is a not-for-profit financial services organization that serves
Christians and their families in the United States. It is a fraternal benefit
society. As a mission-driven, membership-owned organization, it offers its
more than two million members and customers a broad range of financial
products, services and guidance to help them obtain a life of contentment,
confidence and generosity. Thrivent and its subsidiary and affiliate com-
panies offer insurance, investments, banking and advice over the phone
and through online digital channels, as well as through financial profes-
sionals and independent agents nationwide. For more than a century, it
has helped Christians make financial choices that reflect their values while
providing them opportunities to demonstrate their generosity where they
live, work and worship.
Thrivent has sponsored this book in the hope that it will facilitate the
valuable exchange of ideas about what faith-inspired organizations and
communities do—and could do—to address the challenges of economic
and social problems, particularly during times of economic recession,
financial crisis, natural disasters, polarization, rapid technological changes,
globalization and other challenges. Thrivent commissioned the contrib-
utors of the book to write papers on the connection between faith and
finance from their own point of view. However, the views expressed in
the papers contained in this edited volume are solely those of the authors
of each paper. The standard disclaimers apply.
4T. AKRAM AND S. RASHID
An Overview of the Chapters
The second and third chapters of this book concern economic oppor-
tunities, real-world outcomes and faith. Two perspectives, both based on
the authors’ interpretations of the Christian faith, are represented in these
chapters.
In Chapter 2, Ron Sider, a professor of theology, says that the biblical
canon provides the normative framework for his economic and political
views. He believes that human beings are created in the image of God
and therefore are immeasurably precious. Although he acknowledges that
a market economy is a better way to organize economic life than a state-
owned, state-run and collectivist economy, Sider argues that today’s mar-
ket economies have several weaknesses, such as the absolute poverty of a
significant segment of the world’s population, the immense concentration
of wealth, and a highly skewed distribution of income. This, he says, is
unjust and destructive. He holds that the state’s economic domain should
be limited, but that the state must act to redistribute wealth and income
in ways that empower poor and disadvantaged persons and create oppor-
tunities for progress so that all human beings can flourish.
In Chapter 3, Anne Rathbone Bradley, an economist, presents a
market-process viewpoint, influenced by the “Austrian” school of eco-
nomic thought. Bradley also believes that human flourishing is what God
desires for his people and his creation. She holds that Genesis reveals not
only God’s desires but his designs for human beings and provides the
basis for human beings to unleash creativity in ways that both advance
and cultivate God’s creation and makes eternal contributions through
wealth creation for the common good. The economic way of thinking
provides rational principles of human action and the implementation of
human creativity. Bradley believes that this necessitates a market economy
where individuals can discover, learn and—through the system of profits
and losses—find ways to serve one another. She argues that when society
is ordered in a way that allows these market principles to work unfettered
by excessive state interventions and distortions, they will foster greater
human flourishing.
The next two chapters explore the issues of values and consumerism.
It brings perspectives from a philosopher and a historian.
Akeel Bilgrami’s philosophical argument in Chapter 4is inspired by
Mahatma Gandhi, who believed that ethics is a primarily perceptual dis-
cipline. Bilgrami argues that Gandhi’s way of thinking puts the notion of
the unalienated life as the most fundamental political ideal. As a result,
1 INTRODUCTION 5
liberty and equality are treated no longer as central ideals, but as merely
necessary conditions for a fundamental human ideal in a way that removes
the tension between liberty and equality that has been present in the
liberal traditions of the West. All three notions—liberty, equality and
the unalienated life—should be connected, argues Bilgrami. He calls for
a notion of “unalienatedness” that is not the same as the one of pre-
modernity with its absence of liberty and equality. Rather, he holds there
is a notion of liberty, based on this concept of the unalienated life, that
would not generate inequalities, as seen in the world today, while preserv-
ing liberty. In the framework that Bilgrami proposes, “unalienatedness”
is not conceived individualistically. This is consistent with Gandhi’s way
of looking at human life and society.
Karl Gerth, a historian, examines the rise of consumerism in contem-
porary China in Chapter 5. He explores the spread of the defining value
of consuming—a person is what he or she consumes. Gerth’s analysis
leads him to two conclusions. First, consumerism is embedded in indus-
trialization and contemporary capitalism. Second, consumerism does not
spread spontaneously, but is often promoted by the state. He argues
that the history of China since the Communist Revolution in 1949 sug-
gests that the industrializing state, whether “capitalist” or “socialist,” has
played a critical role in spreading consumerist values. Because humans and
their institutions—not “human nature”—create consumerism, the possi-
bility of promoting non-consumerist alternative values such as egalitarian-
ism, civic-mindedness and spirituality still exists in China. Even amid the
rapid spread of consumerism, non-consumerist values to resist this spread
can arise and lead to various movements and changes in lifestyle. But it
remains to be seen whether non-consumerist values will emerge over time
in China, or whether crass consumerism will predominate.
The next two chapters cover issues of faith, financial intermediation
and economic development in Western and Islamic societies.
In Chapter 6, Salim Rashid, an economist, shows the critical role of
Anglican clergymen as pioneers in the theoretical conception of mod-
ern economic development. He examines some ideas advanced by three
well-known Anglican clergymen—George Berkeley, Josiah Tucker and
Jonathan Swift—because their ideas played an important role in economic
development in the United Kingdom during the early years of industri-
alization and capitalism. Berkeley held that: (1) economic development
must bring about a better life for the common person, (2) human capital
is necessary for economic growth and (3) monetary (and financial) devel-
opment is a necessity for enabling economic activity and growth. Tucker
6T. AKRAM AND S. RASHID
argued that a richer country possesses certain economic advantages that
enable it to stay ahead of a poorer, labor-abundant country. Jonathan
Swift recognized that poor countries not only need sound economic poli-
cies to grow, but also a dedicated, committed and visionary elite that
can implement growth-oriented policies and institute reforms. The fig-
ures mentioned by Rashid do not appear in most textbooks in the history
of economic thought and hence most students of economic development
do not know of the role of these Anglian clergymen in pioneering many
of the basic concepts of economic development. Such neglect in the stan-
dard sources is an important reason why the educated reader feels faith
and finance to belong to different spheres of life.
Faisal Kutty, an attorney who also teaches at law schools in the
United States and Canada, offers a critical overview of Islamic finance in
Chapter 7. He provides not just a primer on Islamic finance, but also
examines the myriad of regulatory and legal issues, including consumer
protection concerns, pertaining to it. He argues that Islamic finance, in
theory, has much to offer to global finance, but its current practice falls
far short of Islamic economic and ethical ideals. Islamic finance as it exists
in practice today only marginally implements Islamic principles in many
cases. Debate exists about whether the instruments used in the Islamic
finance industry reflect genuine profit/loss sharing. There is also some
debate about the use of leverage and interest-based financial services. Nev-
ertheless, Kutty is optimistic that if the industry and the government reg-
ulators address the concerns and complaints made by a growing number
of critics, Islamic finance has promise.
The last three chapters of the book take a perspective informed by an
analysis of the impact of faith issues on the plight U.S. workers, on the
workplace and religion, and on the characteristics of good wealth.
Heath Carter, a historian, argues in Chapter 8that if one wants to
understand the new Gilded Age of renewed inequality of income and
wealth in the United States, one must attend to its spiritual origins
because the teaching and the interpretation of Christianity influences pub-
lic attitudes. In the original Gilded Age, a series of grassroots move-
ments sent a shock wave. This resulted in the Church adopting new social
teachings. Social Christian teachings also influenced the institutions of the
state. However, in response to these changes, Christian libertarianism has
had a resurgence, particularly since the beginning of the 1970s. This, in
turn, has led to the transformation of the social and ethical institutions of
Christians in the United States. He argues that this has favored the rise
1 INTRODUCTION 7
of the new Gilded Age, characterized by increased inequalities of income,
wealth, economic opportunity and well-being.
David W. Miller, a scholar of ethics and business and specialist in study-
ing the faith-at-work movement, discusses the relationship between faith
and the workplace in Chapter 9. The conventional wisdom has been to
keep faith separate from business, but there have been notable changes
in recent years as companies claim to be more accepting of—and in some
cases, embracing—employees who wish to bring their faith to work. How-
ever, this poses several challenges, which Miller addresses. He notes that
while there are potential benefits to both employers and employees, there
are also potential problems if not implemented carefully. Miller offers a
constructive way forward to attain the potential benefits for companies
and their employees while minimizing the pitfalls. He argues that compa-
nies that design and embrace faith-friendly policies and practices will find
it advantageous both to the employees and to the company’s bottom line.
In Chapter 10, Michael Naughton, a professor of Catholic studies and
business, defines good wealth in terms of wealth’s creation, distribution
and charitable dimensions from a Catholic perspective. He believes busi-
nesses are the key engine for economic growth. Profit is important, but
he maintains that profit cannot be an end in itself. A just distribution of
wealth is vital for the economy and for society. Furthermore, the charita-
ble function of wealth defines what is “good wealth.” Naughton speaks
of three principles of a just wage: need, contribution and sustainability.
He acknowledges that there are tensions among these three principles of
wealth, but he points to some innovative practices of integrating them.
He also provides a case study to show how these three principles of good
wealth can be successfully integrated.
A Brief Comparison to the Existing Literature
In order to differentiate this volume from the extant literature, it may be
helpful to summarize the faith and finance issues covered and the view-
points represented in this volume.
•Sider (Chapter 2) and Bradley (in Chapter 3) both ask how faith
can provide an overarching framework for finance and economy?
They provide different visions but their visions are inspired by
their interpretations understanding of the fundamental teachings of
Christianity.
8T. AKRAM AND S. RASHID
•Bilgrami (in Chapter 4) and Gerth (in Chapter 5) address what are
the philosophical and practical challenges of connecting faith and
finance. Both perspectives arise outside Christianity, and indeed, out-
side the Abrahamic faiths.
•Rashid and Carter both address the extent to which faith has
involved itself in seeking solutions for general policy issues. Rashid
(in Chapter 6) discusses how Christian clergymen envisioned the
role of faith, economy and finance in economic development, while
Carter (in Chapter 8) analyzes the role of grassroots movements and
the effect of new social teachings on the public’s attitudes to inequal-
ity—whether it be income or wealth inequality—in the past.
•Miller (in Chapter 9) and Naughton (in Chapter 10) examine the
continuing attempts to implement a framework which connects faith
and finance even in today’s corporate America, while Kutty (in
Chapter 7) writes about the challenges of applying Islamic eco-
nomics and ethics in modern banking systems, particularly when
based in western societies.
In terms of the width of issues, interdisciplinary approaches and ecu-
menical interpretation of faith, we find the nearest volume to be that
edited by Ian Harper and Samuel Gregg (2008).2However, that vol-
ume is now a decade old, focused solely on Christianity, and written in
a style that would appeal largely to academics. This is not to deny that
there is a substantial literature on the confluence of faith, economy and
finance, mostly focusing on the idea of trust. This existing literature con-
sists either of financial advice for Christians who wish to manage their
personal finances—the older meaning of economy as household manage-
ment—or it consists of practitioners guides to investing with a conscience.
Much of this existing literature deals with the duty of charity and elab-
orates on the emphasis given on this duty in Christianity. Some of it is
very learned3[while others give faith-based associations an “also ran” in
volumes on social reform].4The seriousness with which Christians take
2Harper, Ian and Gregg, Samuel, eds. (2008). Christian Theology and Market Eco-
nomics. Cheltenham, UK and Northampton, MA: Edward Elgar.
3For example Clark, Henry (1965). The Christian Case Against Poverty. New York,
NY: Association Press.
4Palmer, Tom (2012). After the Welfare State. Ottawa, IL: Jameson Books.
1 INTRODUCTION 9
the duty of practicing their faith is remarkable and justifies limiting our
attention, in a first sally at such a wide-ranging topic, to such authors. By
contrast, while the duty of charity and the merits of trade are repeated
ad nauseam by Islamic economists, the minute portion of Islamic finance
that is actually conducted under the distinguishing hallmark of Islamic
economics—profit sharing—suggests that lip service is being paid.
There is a general lack of awareness of the historical impact of faith and
its future potential. When one looks, there are connections to be extracted
in volumes of financial history5—or within development anthropology.6
These connections do not rise to one’s attention because the recent focus
has been on displaying religion as a profit-making construct by economic
imperialists or as a survival adaptation by evolutionary biologists. How-
ever, we take faith as sufficiently established and important while neither
finance nor economy needs independent justification.
Christianity in the Discussions
of Faith and Finance
Although this introduction has covered many different traditions, the
dominance of Christianity in the discussions throughout the book is
apparent and needs some amplification. First, Christianity has been the
dominant religion of the western world for the last thousand years or
more. Its impact will be more readily appreciated by readers in the English
language. Second, a wealth of primary materials is available for studying
the interplay of faith and finance as envisioned in this discussion. Decisive
historical knowledge often turns upon critical detail; unless we have access
to the primary sources, such details are hidden from sight. Third, we not
only want to look at the influence faith has upon finance, but also the
guidance—or misdirection—faith may have given finance. This focuses
attention more closely on those faiths that have directly engaged with the
economy, and this brings Christianity and Islam directly to mind. Fourth,
5Costabile, Lilla and Neal, Larry (2018). Financial Innovation and Resilience: A Com-
parative Perspective on the Public Banks of Naples (1462–1808). Palgrave Studies in the
History of Finance (London, UK: Palgrave Macmillan).
6McDaniel, Justin Thomas (2018). “The Goddess of Old Money: The Chettiar Bankers
of India and Their Temples in Southeast Asia.” Material Religion: The Journal of Objects,
Art and Belief 4(1): 115–126.
10 T. AKRAM AND S. RASHID
while all religions ascribe power and benevolence to the Creator, Chris-
tianity has given substantial importance to the co-equal status of God’s
power and God’s love. This is at once the peculiar attraction and problem
of Christian theology and makes the engagement of Christianity with the
world more self-conscious and revealing. Finally, one often forgets how
modern Europe has tried to disengage from its Christian past, thereby
making an understanding of the last 200 years limited and confusing. If
one goes to the webpage of the European Union (EU) and looks for its
origins, there is almost nothing about Christianity, even though the flag
of the EU still has 12 stars as in the crown of Mary. How extraordinary,
when some of the EU’s founders were inspired by Christian values and
believed that common Christian values of the European nations provided
a sound basis for creating a community of nations, developing trust, peace
and security and economic and political cooperation.7
If a multireligious study of faith and finance is to be fruitful, it should
map out the major questions that display the interaction of faith and
finance; such a framework is essential if we are to not meander from
one case to the next. The framework should have economic content and
should involve the structure of society, since finance is a part of economics
and economies are ensconced within societies. The following five criteria
seem to be beneficial in establishing the many ways in which faith per-
meates economy and finance. For convenience, they are referred to as
“ethics,” not just because popular usage already identifies some of the
features as such, but because it is necessary to remember that the fulfill-
ment of these ethics is often based on deeper motives than money can
reach.
First is the rule of law, or the legal ethic. Second, the value of work, or
the work ethic. Third, the desirability of consuming, or the consumption
ethic. Fourth, the benefits of science, or the knowledge ethic. Finally,
the need for unconditional acceptance, or the support ethic. To argue in
detail why each one is essential and how they fit together would require
too much space, but perhaps a few words on the work ethic will show
why many existing frameworks for studying the impact of religion on the
economy are inadequate.
7Kaiser, Wolfram (2007). Christian Democracy and the Origins of European Union.
Cambridge, UK and New York, NY: Cambridge University Press.
1 INTRODUCTION 11
Max Weber made the work ethic famous with his thesis that Calvin-
ism galvanized capitalism by providing a dour desire to work indefinitely.
However, if a society really were full of hardworking and thrifty Calvin-
ists and they saved, invested and produced, who would be buying the
mountains of goods that kept coming? Without a consumption ethic, the
work ethic is incapable of sustaining a capitalist society. The point of wider
significance that arises from this analysis is that the requirements for a cap-
italist society may come in “opposite pairs,” as in the consumption ethic
and the work ethic; it has particular importance because the consump-
tion ethic was probably the hardest of the ethics for Christian societies to
accept.
The Importance of Faith and Finance Issues
The importance of religion has been long recognized by many eminent
scholars, such as Alfred North Whitehead, who wrote: “Religion is the
vision of something which stands beyond, behind, and within, the pass-
ing flux of immediate things; something which is real, and yet waiting to
be realized; something which is a remote possibility, and yet the great-
est of present facts; something that gives meaning to all that passes, and
yet eludes all apprehension; something whose possession is the final good,
and yet is beyond all reach; something which is the ultimate ideal, and the
hopeless quest.”8Nevertheless, in this mercantile age, both the general
public and the economics profession have either neglected or underes-
timated the explicit and implicit role of faith in economic institutions,
and within the social framework. The chapters in this book show that
faith influences people’s worldview, their conduct of business and finance,
attitudes toward income inequality, consumption, entrepreneurship and
risk-taking, and corporate and work culture. Perhaps this book will help
redress the prevalent neglect of the role of faith by pointing out such
connections.
The book covers substantial ground even though the book explores
only a few select issues in faith and finance. Obviously, there are many
other viewpoints, from various faiths, and from a variety of perspectives
within any faith. Many interesting and relevant and complex topics are
related to faith and finance, but a comprehensive analysis of all the issues
8Whitehead, Alfred North (1967 [1926]). Science and the Modern World. New York,
NY: The Fordham University Press.
12 T. AKRAM AND S. RASHID
of faith and finance is well beyond the scope of any single book, let alone
this collection of essays. The following chapters show the diversity of per-
spectives and practical connections between faith and finance among many
different communities and domains.
If this book serves to catalyze, perhaps even to generate—in the near
future—open-minded scholarly work and policy discussions and debates
about how faith influences economic decision-making, it will have served
a valuable purpose. We look forward to the greater involvement, both in
terms of its visibility as well as its depth, of faith in such issues as finan-
cial well-being and security, economic institutions, saving behavior, the
accumulation of capital, business ethics and practices, workers’ attitudes,
national policies, corporate culture, and the visions of entrepreneurs and
business leaders. That is, to remind us of that faith can influence busi-
ness and economic activity as well as social and cultural developments
at regional, national and global levels. Since religions must survive, eco-
nomic factors such as the profit-motive and social sustenance often affect
faith but this book shows that religion and faith also have a pervasive
role in molding economics and finance—a role that requires careful and
detailed analysis.
Bibliography
Clark, Henry. The Christian Case Against Poverty. New York, NY: Association
Press, 1965.
Costabile, Lilla and Larry Neal. Financial Innovation and Resilience: A Compar-
ative Perspective on the Public Banks of Naples (1462–1808). Palgrave Studies
in the History of Finance. London, UK: Palgrave Macmillan, 2018.
Harper, Ian and Samuel Gregg, eds. Christian Theology and Market Economics.
Cheltenham, UK and Northampton, MA: Edward Elgar, 2008.
Kaiser, Wolfram. Christian Democracy and the Origins of European Union.Cam-
bridge, UK and New York, NY: Cambridge University Press, 2007.
McDaniel, Justin Thomas. “The Goddess of Old Money: The Chettiar Bankers
of India and Their Temples in Southeast Asia.” Material Religion: The Journal
of Objects, Art and Belief 4, no. 1 (2018): 115–126.
Palmer, Tom. After the Welfare State. Ottawa, IL: Jameson Books, 2012.
Whitehead, Alfred North. Science and the Modern World.NewYork,NY:Ford-
ham University Press, 1967 [1926].
Whitehead, Alfred North. Religion in the Making.NewYork,NY:TheFree
Press, 1996 [1926].
1 INTRODUCTION 13
Open Access This chapter is licensed under the terms of the Creative Commons
Attribution 4.0 International License (http://creativecommons.org/licenses/
by/4.0/), which permits use, sharing, adaptation, distribution and reproduction
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license and your intended use is not permitted by statutory regulation or exceeds
the permitted use, you will need to obtain permission directly from the copyright
holder.
CHAPTER 2
Christian Faith and Economics
Ronald J. Sider
Every person’s views on economic issues and the political judgments that
interrelate with them have four components: (1) a normative framework;
(2) a broad study of society (using disciplines such as economics, his-
tory, and politics); (3) an economic/political philosophy; and (4) more
detailed study relevant to any specific issue. Most people, to be sure, do
not think consciously about these four components. But they are present
nonetheless.
For example, consider the great twentieth-century debate between
advocates of a market economy and a state-owned and controlled econ-
omy. Everyone involved in the debate embraced some normative frame-
work that included ideas about the nature of persons and justice. Every-
one thought (or just assumed what their society told them) about the
study of economics and the history of different types of economic
arrangements. Everyone (consciously or not) combined their norma-
tive framework and their broad study of economics and society to
form an economic/political philosophy which served as a road map or
handy guide when making detailed economic decisions. Finally, everyone
thought carefully about (or again, simply accepted the assumptions of
R. J. Sider (B)
Palmer Theological Seminary, Wayne, PA, USA
© The Author(s) 2020
T. Akram and S. Rashid (eds.), Faith, Finance, and Economy,
https://doi.org/10.1007/978- 3-030-38784-6_2
15
16 R. J. SIDER
surrounding society) the detailed analysis relevant to whether a specific
economic proposal was wise.
For example, two people could embrace the same normative frame-
work, the same broad study of society and the same economic/political
philosophy (say a commitment to a market economy) and still disagree
about whether the detailed analyses of raising the minimum wage have
shown that doing that helped or hurt poor people. Some economists
have argued that the overall impact of raising the minimum wage is to
disadvantage poor people. The majority of economists have argued that
the impact of raising the minimum wage helps more poor people than it
harms. It is important to understand that the disagreement is not about
normative values, a broad study of society or political philosophy, but
about detailed economic analysis about the actual impact on poor people
of raising the minimum wage.
Every person’s normative framework has a profound impact on his
or her concrete economic decisions. For example, Princeton philosopher
Peter Singer, Karl Marx, and traditional Christians have held very differ-
ent views of the nature of persons and justice. In our highly pluralistic
society, people hold different, often contradictor y views on all the impor-
tant normative judgments that shape one’s approach to economic and
political judgments. Today’s radical pluralism makes political decisions in
a democratic society much more difficult than if everyone shared the same
normative framework.
Obviously, it would be very useful if there were some neutral source
for a normative framework that everyone shared. Long ago, Alexis de
Tocqueville claimed that “without ideas in common, no common action
would be possible …. For society to prosper, it is essential that all minds
of the citizens should always be rallied and held together by some leading
ideas.”1
John Rawls (perhaps the most influential political philosopher in the
last three decades of the twentieth century) used to claim in his famous
book, ATheoryofJustice(1971) that his method offered a perfectly neu-
tral starting point free of any specific definition of disputed claims about
the good. But critics correctly pointed out that Rawls assumed a particular
1Democracy in America, quoted in Lawrence E. Adams, Going Public: Christian Respon-
sibility in a Divided Nation (Grand Rapids: Brazos, 2002), 67.
2 CHRISTIAN FAITH AND ECONOMICS 17
(and not universally accepted) view of persons.2Andinhislaterwritings,
Rawls acknowledged that every person operates with some understanding
of the good grounded in that person’s most basic religious or philosophi-
cal beliefs.3There is simply no neutral source for a normative framework.4
How then shall we proceed given two indisputable realities: (1) as I
have illustrated briefly in the preceding paragraphs, a normative frame-
work is an essential component of every economic/political judgment
and (2) in our radically pluralistic society, there is no normative frame-
work shared by all or even most citizens. The only acceptable possibility
in a free society is to acknowledge this pluralism and invite every cit-
izen to articulate and promote an economic and political agenda that
is shaped significantly by each person’s deepest religious/philosophical
beliefs. Then a democratic society uses free debate and a secret ballot to
select legislators who decide what at a specific moment will be legislated.
That means that every citizen—whether Hindu, Muslim, atheist, Jew, and
Christian—is welcome to propose public policies that are grounded to
some significant extent in that person’s personal religious/philosophical
beliefs.
I am an evangelical Protestant Christian—no, not the Jerry Falwell,
Franklin Graham pro-Trump kind (but explaining that would require
another lecture!). As an evangelical Christian, I seek to derive my nor-
mative framework to some extent from reason, tradition, and experience.
But the most basic source for my normative framework comes from the
biblical canon of Old and New Testaments. Obviously, when I seek to
persuade people in our highly pluralistic society to adopt my proposals on
economic justice, I do not normally quote biblical texts. I seek to use lan-
guage and offer arguments that are understandable and (hopefully) per-
suasive for people with many different religious/philosophical beliefs. But
2For a critique of Rawls see Raymond Plant, Politics, Theology and History (Cambridge:
Cambridge University Press, 2001), 331–347; Michael Sandel, Liberalism and the Limits
of Justice (Cambridge: Cambridge University Press, 1982), 62–64; and Ashley Woodiwiss,
‘Rawls, Religion, and Liberalism,’ in Thomas W. Heilke and Ashley Woodiwiss, eds., The
Re-Enchantment of Political Science (Lanham: Lexington Books, 2001), Chapter 3.
3See the discussion in Ronald J. Sider, Just Politics: A Guide for Christian Engagement
(Grand Rapids: Brazos, 2012), 22.
4“Natural law” advocated by many Catholics makes a similar claim to offer a neutral
starting point. See my critique in ibid., 21.
18 R. J. SIDER
that does not change the fact that the normative framework that shapes
my economic proposals comes from the biblical canon.
In this paper, therefore, I will seek first to define key biblical norms
that shape my thinking about economic life and then second, show how
I develop an economic/political philosophy which hopefully flows both
from these key biblical norms and also my careful study of society gener-
ally and economics in particular.
Four normative issues are especially important: the nature of persons;
the shape of justice; God’s special concern for the poor; and the role of
government.
First, the nature of persons. The first chapter of the Bible declares that
persons—every person!—is created in the very image of God. Human
beings are the only part of the created order that the Bible declares to bear
the divine image. The creation story also makes it clear that the responsi-
bility for (stewardship of) the rest of the creation which flows from bear-
ing the image of God means that persons must lovingly watch over and
care for (Genesis 2:15) the rest of creation. Precisely because every per-
son—no matter how rich or poor, young or old, weak or strong—is cre-
ated in the image of God, the law and the prophets in the Old Testament
spell out how God wants every person to be treated.
The incarnation underlines even more powerfully the worth and value
of every individual. Christians believe that the Creator of the galaxies
became a human being—thus demonstrating in a powerful way that being
human involves an immeasurably great dignity. Furthermore, the Incar-
nate One demonstrated a special concern for children, lepers, despised
Samaritans, oppressed women—thus teaching that every individual per-
son—even the most marginalized—is immeasurably valuable. Further-
more, Christians believe that Jesus died to offer salvation to every human
being. Christians also believe that every single person is invited to live
forever with the Risen Lord. Biblical teaching affirms the value, dignity,
and worth of every person in a profoundly deep way.
But the biblical view of persons also has a crucial communal side. Con-
trary to modern thinking (deeply shaped by John Locke), persons are not
isolated individuals whose essential purpose is self-fulfillment. Every per-
son is made in the image of the Triune God—who Christians believe,
is three persons in one substance. Because persons are created in the
image of the divine triune community, they only reach the fulfillment
intended by their Creator when they are living in right relationship with
their neighbors. Neither Testament describes salvation only as a personal,
2 CHRISTIAN FAITH AND ECONOMICS 19
individual relationship with God. One central aspect of salvation in both
the Old and New Testaments is a new kind of visible social community.
In the Old Testament that meant economic arrangements shaped by jus-
tice. In the New Testament, that means the rich sharing dramatically with
the poor; that means men accepting women in astonishingly new ways;
that means masters treating slaves as persons; and that means Jews and
Gentiles overcoming the worst racial hatred in the ancient world.
The biblical understanding of persons transcends both the radical indi-
vidualism of contemporary Western culture and the excessive communal-
ism of both traditional cultures and communistic societies. Biblical faith
affirms both the profound dignity and freedom of every person and also
our need for wholesome, just community. That biblical understanding will
significantly shape my view of the best economic framework.
One other aspect of the biblical view of persons is very important.
Created good, persons have rebelled against God and the result is deeply
selfish persons and unjust social structures. Because of this profound self-
ishness that inclines every person to use any power they possess for selfish
advantage, all human institutions must be structured to avoid centralized,
unchecked power.
Second, a biblical understanding of justice. Much modern Western
thought believes that justice is merely a subjective feeling. Whereas bibli-
cal faith teaches that public law should reflect a divine standard of justice,
many contemporaries argue that human laws are merely human products
designed by the powerful for their own self-interest (often, in fact that is
what happens!). Again and again, the Bible says God loves justice, reveals
the essential shape of genuine justice, and demands that God’s people
promote justice.
One of the great debates of the twentieth century was whether justice is
only procedural or also distributive. Does justice refer only to whether the
procedures (e.g., the judicial systems) are fair or does justice also refer to
outcomes (i.e., whether the distribution of land, income, health care, etc.)
is fair? Political philosophers like Robert Nozick argued for an exclusively
procedural view. If the procedures are fair, the outcome is just regardless
of the distributive outcome.5
The two key Hebrew words for justice are mishpat and tsedaqah.Fre-
quently, these words are translated as “justice” and “righteousness,” but
5See the discussion of Nozick in Karen Lebacqz, Six Theories of Justice (Minneapolis:
Augsburg, 1986), 51–55.
20 R. J. SIDER
they both refer to right relations in the socio-economic order. Exami-
nation of their use demonstrates that they refer to both procedural and
distributive justice. The words certainly refer to unbiased courts that ren-
der impartial justice to rich and poor (e.g. Leviticus 19:15; Deuteronomy
1:17–19). Equally clearly, the same words are used to demand distribu-
tive justice—i.e. economic justice where everyone has access to economic
sufficiency (e.g. Isaiah 5:7–9; Amos 5:11–12; Micah 2:2; 6:8). Often too,
the words refer to a restorative process that delivers people from economic
oppression.6
The Old Testament discussion of the distribution of the land in Israel
provides crucial insight into the content of the biblical understanding of
distributive justice. Since Israel was an agricultural society, land was the
basic resource needed to create wealth and enjoy an adequate economic
existence. Israel was different from surrounding societies. In Egypt, the
pharaoh or the temples owned most of the land. In other Near Eastern
societies, a feudal system existed where the king granted a few people
large tracts of land worked by landless laborers.
According to Joshua 18 and Numbers 26, each Israelite family received
their own land when Israel moved into the land of Canaan.7After a
scholarly study of Israel in the time of the judges, Norman Gottwald
concluded that Israel at that time was a relatively egalitarian society of
small landowners.8The Old Testament also contains measures that if fol-
lowed would prevent the accumulation of most of the land in a few hands.
Leviticus 25 prescribes that no matter why families lost their ancestral
land, they should receive it back at the fiftieth year of Jubilee.
The prophetic writings, however, make it very clear that in the period
of the kings, many people lost their land as the kings and their close
associates accumulated vast holdings. In fact, the prophets declare that
this economic injustice so angered God that God sent the nations of Israel
and then Judah into captivity. But the prophets also looked ahead to a
6The vast number of texts that speak of God’s special concern for the poor also
underlines the fact that in the biblical framework, justice includes a major distributive
component. See further Sider, Just Politics, 81–90.
7Whether or not these texts reflect actual history, they reveal the Old Testament’s
socio-economic ideal.
8The Tribes of Yahweh: A Sociology of the Religion of Liberated Israel 1250–1050BCE
(London: SCM Press, 1979).
2 CHRISTIAN FAITH AND ECONOMICS 21
future Messianic time when all persons would again enjoy their own land
free of fear that powerful people would seize it (Micah 4:4).9
An important criterion of economic justice emerges from this biblical
discussion of the land in Israelite society. Land is the basic capital in an
agricultural society. And the biblical ideal for the land is not that the king
or a few wealthy people own all the land, but rather that every family has
their own land. The basic principle is that God wants every person and
family to have access to the productive resources so that if they act respon-
sibly, they can earn an adequate income and be dignified members of their
community. Obviously, in our information society, knowledge is the most
important capital. Therefore, applying this principle of economic justice
to contemporary society means, especially (although not exclusively) that
every person must have access to an excellent education.
Third, a special concern for the poor. One of the most frequent themes
in the biblical canon is that God has a special concern for the poor and
that God’s people must do likewise. There are literally hundreds of verses
on this theme in the Bible. God acts in history to lift up the poor and
oppressed (Deuteronomy 26:5–8). God so identifies with the poor that
being kind to the poor is like making a loan to God (Proverbs 19:17).
God casts down both those who get rich by oppressing others and also
people with abundant resources who simply fail to share (e.g. James 5:15;
Ezekiel 16:49–50). Indeed, biblical texts even say that no matter what
one’s religious words or sacred activities, religious people who neglect
the poor are not really God’s people at all (e.g. Amos 5:21–24). Jesus
even said that those who do not feed the hungry and clothe the naked
depart eternally from the Living God (Matthew 25:41).10
God measures societies in part by what they do to the poorest, weakest
and most marginalized. A vigorous emphasis on empowering poor people
must be a central part of any biblically shaped approach to economics.
Fourth, the role of government. The Old Testament repeatedly pre-
scribes a role for the king to promote economic justice. A text about
Solomon uses the two key Hebrew words for justice to describe the king’s
role: The Lord “has made you king to maintain justice and righteousness”
9For a fuller discussion of the Old Testament material on the land, see Sider, Rich
Christians in an Age of Hunger, 6th ed. (Nashville: W Publishing, 2015), 72–80 and
Sider, Just Politics, 90–96.
10 For an extended treatment of this topic, see my Rich Christians in an Age of Hunger,
45–69.
22 R. J. SIDER
(1 Kings 10:19). God was pleased with King Josiah because “he defended
the cause of the poor and needy” (Jeremiah 22:15–16). We have seen that
Leviticus 25 called for every family to receive back its ancestral land at the
fiftieth year of Jubilee. And Deuteronomy 15 prescribed the forgiveness
of debts every seven years. Neither text in any way suggests that forgiv-
ing debts in the seventh year or returning a family’s ancestral land on the
fiftieth year was a voluntary optional act that persons were free to practice
or ignore. Presumably, the rulers were supposed to implement these laws.
Nehemiah 5 contains a striking example of governmental redistribu-
tion of economic resources. Nehemiah the governor learned that dur-
ing a famine, rich powerful Jews had oppressed poor Jews. Poor Jewish
people had mortgaged their land to buy food and eventually lost their
land. Other poor Jews sold their children into slavery. Furious, Nehemiah
the ruler called a general assembly and denounced the powerful oppres-
sors. “Give back to them immediately their fields, vineyards, olive groves
and houses, and also the interest you are charging them” (Nehemiah
5:11). And Nehemiah demanded that the rich take an oath to keep their
promises. Nehemiah did not even wait for the next Jubilee to demand the
return of ancestral land. As the Governor (i.e. the head of the govern-
ment), he implemented economic justice which meant everyone having
access to the productive resources. There is simply no biblical basis for a
libertarian philosophy that states that government should play no role in
promoting economic justice.
In order to arrive at some clarity on what shape I believe economic life
should have today, I seek to combine my normative framework (derived
as carefully as possible from the biblical canon) with a careful study of
society using the tools of economics, history and politics.
Private Ownership, a Market Economy
and the Decentralization of Power
Probably the greatest economic debate of the twentieth-century raged
between those supporting a socialist/communist approach and those
favoring a capitalist/free-market economy. In the first model, the state
owns most or all of the means of production and government agencies set
wages, prices and production levels. (A central planning office in Moscow
set millions of prices each year.) In the second model, private persons own
the bulk of the means of production and supply and demand determines
most prices and wages.
2 CHRISTIAN FAITH AND ECONOMICS 23
Both biblical norms and the experience of the last one-hundred years
underline the weaknesses of the first model.
A biblical normative framework raises serious questions about a state-
owned, state-controlled economy. The biblical view of persons suggests
that God creates each person to be a co-worker with God in shap-
ing the material world. That calling is undermined if a few people
make all the important decisions. Furthermore, from the Ten Com-
mandments’ prohibition against stealing to Jesus’ call to his disciples to
make loans to the poor, the Bible seems to affirm the virtue of private
property—although it also makes clear that the God who demands eco-
nomic justice for everyone is the only absolute owner (Leviticus 25:23).
The principle that in a sinful world, people with unchecked central
ized power will almost certainly use that power to oppress others also
points to the importance of private property. Widespread private own-
ership fundamentally decentralizes power. On the other hand, when the
state owns and controls all productive assets, then economic and political
power are highly centralized.
The experience of the last hundred years demonstrates that the com-
munist model has huge negative results. The unchecked power of com-
munist political leaders resulted in the loss of freedom (religion, speech,
assembly) as the state sought to, and largely succeeded in, controlling
every sector of society. It also resulted in the channeling of vast special
privileges to a tiny party elite—in contradiction of the communist egali-
tarian ideal. It is no accident that societies with widespread private own-
ership enjoy higher levels of freedom than societies where the state owns
most or all of the means of production. Widespread private ownership
decentralizes power in a way that makes it much more difficult for politi-
cal leaders to dominate all of society for their selfish advantage.
Furthermore, the communist model proved to be less economically
efficient. No group of bureaucrats in a central office knows enough to
wisely determine prices and levels of production for a whole society. The
market mechanism of supply and demand simply works better. That is
substantially why China experienced explosive economic growth after the
Chinese government increasingly embraced major aspects of a free-market
economy after 1979.
24 R. J. SIDER
I conclude that both biblical norms and historical experience indicate
that a largely privately owned economy where supply and demand deter-
mine most wages and prices is the preferred economic model.11 And the
fact that widespread adoption of this economic model has contributed
greatly to a dramatic drop in global poverty means that on balance the
poor of the earth have benefited. Tens of millions of very poor people in
South Korea and Taiwan and more recently many hundreds of millions of
very poor people in China, India, Indonesia, and elsewhere are no longer
poor in part because their nations embraced important aspects of a market
economy.
But that in no way means that today’s market economies have no prob-
lems when judged by a biblical normative framework.
For one thing, the ideal assumed by market-economy theorists seldom
or ever exists. Ideally, both consumers and potential competitors have
full information, monopolies do not exist, and there are no externalities.
But in real life advertising manipulation and monopolies often work to
promote excessive benefits to a few.
Second, at least one-quarter of the world’s people do not enjoy what
the biblical economic norm demands—access for everyone to the pro-
ductive capital needed to earn an adequate living. Vast numbers of peo-
ple have virtually no capital. They have no land, almost no money and
extremely little or very poor education. A market-economy simply sup-
plies what the people with capital demand. It allows the others to die of
starvation or disease.
Third, in recent decades, capitalist societies have seen vast concentra-
tions of income and wealth in small elites. In the United States, the richest
1% own more wealth than the bottom 90%.12 In recent years, more than
90% of all the growth in national income has flowed to the richest one
percent.13 Income inequality is greater today than at any time since just
before the Great Depression.14
11 For a longer discussion of these issues, see Sider, Just Politics, 113–115 and Sider,
Rich Christians in an Age of Hunger, 147–156.
12 See Christopher Ingraham in the Washington Post, December, 2017.
13 According to Josh Barro in Business Insider, September 12, 2013. See also the data
cited in my Fixing the Moral Deficit (Downers Grove: InterVarsity, 2012), 26.
14 See Chad Stone et al., “A Guide to Statistics on Historical Trends in Income
Inequality,” Center for Budget and Policy Priorities, February 16, 2018, https://cbpp.
org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-
inequality.
2 CHRISTIAN FAITH AND ECONOMICS 25
Why is that a problem? Not because making a great deal of money
from a new invention that benefits many people is bad (It is not). Nor
because the biblical norm is equality of income and wealth (It is not).
But both the biblical doctrine of human selfishness and human history
warn that centralized power will be used for the selfish advantage of the
few.
How much economic inequality is acceptable and when does it become
destructive to the rest of society? Neither the biblical canon nor histor-
ical wisdom provide any precise mathematical answer to that question.
But at least one fundamental principle is relevant. One crucial aspect
of economic justice is that everyone must have access to the productive
assets so they can earn an adequate living. That means that whenever the
extremes of wealth and income make it difficult or prevent some people
from having access to adequate productive capital, or prevent society from
caring for the young, old and disabled who cannot care for themselves,
that inequality is wrong and must be corrected. An increase in economic
inequality that harms the poorer members of society and hinders their
opportunity to gain access to adequate, productive capital is unjust. Lord
Acton’s dictum that power corrupts and absolute power corrupts abso-
lutely underlines this point.
I would argue that the extremes of income and wealth in the United
States today have reached that point. The New York Times reported on
October 10, 2015, that almost one-half of all the campaign contribu-
tions for the presidential candidates from both parties had come from
just 158 extremely wealthy families. Is it surprising that many powerful
politicians promote policies that both provide huge tax cuts to the rich-
est Americans and also would cut food stamps and health coverage for
poorer Americans? And these same politicians refuse to vote for adequate
funding to provide quality educational opportunity for millions of poor,
minority, inner-city children. Clearly, the high concentration of wealth is
undermining the opportunity for poorer Americans to acquire adequate
nutrition, health care, and the capital to become self-sufficient.
Interestingly, some economic studies seem to show that great eco-
nomic inequality is also harmful to the economy. A study by the Interna-
tional Monetary Fund suggested strongly that the sharp increase in eco-
nomic inequality just before the Great Depression (starting in 1929) and
the Great Recession (starting in 2007) contributed significantly to both
26 R. J. SIDER
economic disasters. Another study showed that a decrease in inequality
produces substantial economic growth.15
A fourth problem with today’s market economies is that they are cre-
ating dangerous environmental changes that will very likely impose huge
costs on future generations. Unfortunately, markets pay little attention to
future generations. The market fails to account for the “externality” of
environmental pollution.
These problems with today’s market economies can be fixed. But that
will require the right kind of governmental action. The libertarian notion
that government has no role in empowering poor people and that all we
need to overcome poverty is a totally laissez-faire market-economy contra-
dicts both biblical teaching on the role of government and the historical
experience of countries like South Korea and Taiwan. Earlier, we saw that
the Bible describes a significant role for government to empower poor
people. And careful study of countries like South Korea and Taiwan show
that their economic “miracles” were the result of the adoption of a market
economy along with the right kind of governmental activity.
In South Korea, economic growth started around 1952. Governmental
action increased the percentage of farmers who owned their own land
from 50 to 94%.16 Something similar happened in Taiwan. In addition,
the governments in both countries invested heavily in health, education
and job training. An activist government was central to the economic
explosion in both nations. Nobel laureate economist Amartya Sen stresses
the importance of the right kind of government action. “In the past of
the rich countries today we can see quite a remarkable history of public
action, dealing, respectively, with education, health care, land reforms and
so on.”17
15 Michael Kumhof and Romain Rancière. “Leveraging Inequality,” Finance and Devel-
opment, 47, no. 4 (2010), 28–31; Andrew G. Berg and Jonathan D. Ostry. “Equality and
Efficiency,” Finance and Development, 48, no. 3 (2011). www.imf.org/external/pubs/
ft/fandd/2011/09/berg.htm. See also, Joseph E. Stiglitz, The Price of Inequality.New
York: Norton 2012, especially Chapter 4.
16 United Nations, Human Development Report 1993, 30. New York: UNDP, 1993.
17 Development as Freedom (New York: Knopf, 1999), 143. See also Abhijit Vinayak
Banerjee and Esther Duflo, Poor Economics: A Radical Rethinking of the Way to Fight
Global Poverty, 46–58, 81–104, 394–401 (New York: Public Affairs, 2011).
2 CHRISTIAN FAITH AND ECONOMICS 27
I can sketch only very briefly how my economic/political philoso-
phy (grounded I hope in a normative biblical framework and a care-
ful—as unbiased as possible!—study of the best societal research by
economists, sociologists, historians, etc.) leads me to more specific con-
temporary judgments about economic and political life. But here are a few
examples.
Government has a significant role to play in promoting economic jus-
tice but government must remain limited. Government rightly designs
educational systems that promote quality education for every child. Gen-
erous Pell grants that enable children from poor families to achieve a col-
lege degree creates not dependency but self-sufficiency for a life time—
and therefore acts as a just measure of economic redistribution. Because
every person is created in the image of God, society (family, religious
institutions, non-governmental agencies, and government) should guar-
antee that everyone has access to quality health care, basic food and
housing. Whenever other institutions are unable to provide necessary
resources, government rightly acts to prevent hunger, insufficient health
care, inadequate housing, etc. But always, government activity must be
shaped in a way that nurtures self-sufficiency, not dependency. And it
must strengthen, rather than undermine, non-governmental institutions
like family. (For example, a welfare policy that undermines rather than
strengthens stable two-parent families is misguided.) The earned income
tax credit (which both reduces poverty and rewards work and respon-
sibility) illustrates the right kind of government-mandated promotion of
economic justice. Tax policies (like the graduated income tax) that require
that richer members of society pay taxes at higher levels than poorer peo-
ple rightly provide the funds to promote economic redistribution that
offers everyone access to productive resources. It also tends to prevent
a dangerous concentration of wealth in just a few hands. Able-bodied
people have a moral obligation to work responsibly and society has a
responsibility to provide jobs that pay a living wage to all who do work
responsibly.
The reality of human selfishness means that unchecked, centralized
power is always dangerous. That is one important reason why govern-
ment policy should always seek to strengthen rather than undermine non-
governmental institutions. That is also why governmental policy should
support strong (democratically run!) unions because unions rightly offer
a counterweight to otherwise unchecked corporate power.
28 R. J. SIDER
Always, government policy should seek to empower the poorer mem-
bers of society. Every legislative proposal should be evaluated in part on
what is its likely effect on the poorest.
Obviously, applying my economic/political philosophy to any specific
issue in any specific society is a complex task. There is no mathemati-
cal formula for determining when a specific legislative proposal properly
balances the role of governmental and non-governmental institutions. Or
when specific legislation would result in excessive centralized governmen-
tal power. Or what kind of governmental action is needed to prevent
a few non-governmental institutions (e.g. banks, private corporations)
from consolidating massive unchecked power. Prudential wisdom and
genuine dialogue with those who disagree and present conflicting data are
essential.
The mere fact that a Christian seeks to ground her economic/political
agenda in a normative biblical framework and careful, factually grounded
study of society does not guarantee that her concrete proposals will be
wise and effective. Unforeseen consequences regularly occur. But a per-
sistent commitment to improving one’s understanding of both biblical
norms and the best factual data provides an excellent foundation for
improving one’s concrete agenda. If one starts with the belief that every
person, no matter how poor or weak, is created in the image of God
and is therefore inestimably precious; that justice demands systems that
empower people with few resources to have access to the capital to earn a
good living; that God’s special concern for the poor means that God and
God’s people measure societies especially by what they do to the poor;
and that government properly acts to redistribute resources in effective
ways that empower poor people; if one starts with this set of normative
commitments, then one will support effective programs that empower
poorer members of society and reduce dangerous extremes of income
and wealth. Always, of course one will have to evaluate concrete programs
designed to reach these goals to determine whether they are effective and
if effective, whether they are the most effective ways to reach these goals.
Bibliography
Adams, Lawrence E. Going Public: Christian Responsibility in a Divided Nation,
67. Grand Rapids: Brazos, 2002.
Banerjee, Abhijit Vinayak and Esther Duflo. Poor Economics: A Radical Rethink-
ing of the Way to Fight Global Poverty, 46–58, 81–104, 394–401. New York:
Public Affairs, 2011.
2 CHRISTIAN FAITH AND ECONOMICS 29
Berg, Andrew G. and Jonathan D. Ostry. “Equality and Efficiency.” Finance
and Development 48, no. 3 (2011). www.imf.org/external/pubs/ft/fandd/
2011/09/berg.htm.
Gottwald, Norman. The Tribes of Yahweh: A Sociology of the Religion of Liberated
Israel 1250–1050BCE. London: SCM Press, 1979.
Kumhof, Michael and Romain Rancière. “Leveraging Inequality.” Finance and
Development 47, no. 4 (2010): 28–31.
Lebacqz, Karen. Six Theories of Justice, 51–55. Minneapolis: Augsburg, 1986.
Plant, Raymond. Politics, Theology and History, 331–347. Cambridge: Cambridge
University Press, 2001.
Sandel, Michael. Liberalism and the Limits of Justice, 62–64. Cambridge: Cam-
bridge University Press, 1982.
Sen, Amartya. Development as Freedom, 143. New York: Knopf, 1999.
Sider, Ronald J. Just Politics: A Guide for Christian Engagement, 22. Grand
Rapids: Brazos, 2012.
Sider, Ronald J. Fixing the Moral Deficit, 26. Downers Grove: InterVarsity, 2012.
Sider, Ronald J. Rich Christians in an Age of Hunger, 6th ed., 72–80. Nashville:
W Publishing, 2015.
Stiglitz, Joseph E. The Price of Inequality. New York: Norton, 2012.
Stone, Chad et al. “A Guide to Statistics on Historical Trends in
Income Inequality.” Center for Budget and Policy Priorities, Febru-
ary 16, 2018. https://cbpp.org/research/poverty-and-inequality/a-guide-to-
statistics-on-historical-trends-in-income-inequality.
Open Access This chapter is licensed under the terms of the Creative Commons
Attribution 4.0 International License (http://creativecommons.org/licenses/
by/4.0/), which permits use, sharing, adaptation, distribution and reproduction
in any medium or format, as long as you give appropriate credit to the original
author(s) and the source, provide a link to the Creative Commons license and
indicate if changes were made.
The images or other third party material in this chapter are included in the
chapter’s Creative Commons license, unless indicated otherwise in a credit line
to the material. If material is not included in the chapter’s Creative Commons
license and your intended use is not permitted by statutory regulation or exceeds
the permitted use, you will need to obtain permission directly from the copyright
holder.
CHAPTER 3
Biblical Stewardship and Economic Progress
Anne Rathbone Bradley
Introduction God’s Design and Desires
This paper will be an exploration into the design and desires of God which
are revealed to us in the story of creation. When society is constructed in
ways that allow human beings to work and unleash their human creativity
in God-pleasing ways, human flourishing is advanced. When society is not
ordered in ways that both respect the desires of God and the objective
realities of creation human flourishing is hindered and stunted. There is
a path to human flourishing that requires specific institutions and must
respect the principles and realities that economics helps illuminate.
This paper will examine those economic realities from the whole scope
and comprehensive narrative of scripture to understand how we can bet-
ter advance human flourishing around the world. We will begin with a
theological attempt to understand God’s design and desires for us and his
creation, which reveals his purposes and ours. The paper will then discuss
how understanding our purpose requires that we live out our purpose
which is ordained through our creation (imago dei) through our human
creativity as it is applied to nature. The transformation that occurs allows
us to fulfill God’s creation mandate as it is revealed in Genesis. We then
A. R. Bradley (B)
Academic Director, The Fund for American Studies, Washington, DC, USA
© The Author(s) 2020
T. Akram and S. Rashid (eds.), Faith, Finance, and Economy,
https://doi.org/10.1007/978- 3-030-38784-6_3
31
32 A. R. BRADLEY
will assert a biblical perspective of stewardship: oikonomia—prudent stew-
ardship of the gifts and talents which God has endowed each of us with
for the purposes of work with the goal of value creation which allows us to
make contributions to shalom, or flourishing. The paper will define flour-
ishing theologically and then present the Austrian school of economic
thinking as it was particularly developed by Ludwig von Mises and F. A.
Hayek as detailing a political economy that is most in line with a world
where individuals can pursue and obtain biblical human flourishing.
The creation account detailed in Genesis gives us the divine context for
our existence. We are not here by chance. We are formed by the creative
imagination and hand of God, made in his image and likeness (Genesis
1:25–28). We are here precisely because God put us here. This reality
instills great dignity, purpose, and immeasurable value within us. Genesis
1:25–28 informs us both about the nature of God and the nature of
mankind:
God made the wild animals according to their kinds, the livestock accord-
ing to their kinds, and all the creatures that move along the ground accord-
ing to their kinds. And God saw that it was good. Then God said, “Let us
make mankind in our image, in our like- ness, so that they may rule over
the fish in the sea and the birds in the sky, over the livestock and all the
wild animals, and over all the creatures that move along the ground.” So
God created mankind in his own image, in the image of God he created
them; male and female he created them. God blessed them and said to
them, “Be fruitful and increase in number; fill the earth and subdue it.
Rule over the fish in the sea and the birds in the sky and over every living
creature that moves on the ground.”
What does it mean to be created in God’s image? In Systematic Theol-
ogy, Wayne Grudem points out that the words used in Genesis 1:26–27,
“image” (tselem) and “likeness” (demut ), in the Hebrew “refer to some-
thing that is similar but not identical to the thing that it represents or is
the ‘image’ of.” Genesis 1:26 “would have meant to the original readers,
‘Let us make man to be like us and to represent us.’”1
The Hebrew root of the Latin phrase for image of God—imago Dei—
means image, shadow, or likeness of God. At the very least, this means
humans occupy a higher place in the created order because we alone are
1Grudem, Wayne A. Systematic Theology: An Introduction to Biblical Doctrine.Grand
Rapids: Zondervan, 1994.
3 BIBLICAL STEWARDSHIP AND ECONOMIC PROGRESS 33
imprinted with god-like characteristics. Even more so, imaging God is
a central aspect of our fundamental created order. To be fully human
is to reflect God’s creative, spiritual, intelligent, communicative, rela-
tional, moral, and purposeful characteristics.2By realizing our gifts to
their utmost potential, we are most obedient to God’s design.
Human existence is a special, authoritative indicator of the creative
power of God. God created man out of nothing (ex nihilo). He is a maker,
an author, a creator, and a worker. We harbor an aspect of this creative
ability in our capability to create something out of what God has already
given us. Only God can create something out of nothing, but by forming
us in his image, we can create value from and improve upon his creation.
We are commanded to do nothing less. Not only do we reflect God’s
characteristics, but as his image-bearers, we have specific duties to fill. We
are the only creatures commanded to fill the earth and subdue it, and to
have dominion over all of creation (Genesis 1:28). We roam the earth
with all of God’s creatures, but we also rule the earth and God’s crea-
tures. God created us with the capability and the responsibility to reign
over his earthly creation.
Understanding the implications of being made in the image of God is
the first step. Fully appreciating the context of our creation helps foster
great personal fulfillment because it brings awareness to God’s intentional
design of and desires for his creation.
God is unique and as image-bearers we too are unique. We bear simi-
lar characteristics, yet we are all different in talents, gifts, abilities, atti-
tudes toward risk, subjective preferences and creative capacities. It is
God’s intentional design for no two humans to be the same. Our dis-
tinct uniqueness points to God’s infinite power and gives us purpose.
Humans are the crowning splendor of God’s hand (Isaiah 62:3). Not
only does God create us all differently, but he also gives each person a
specific purpose. Each of us is his unique workmanship for the role he
designed specifically for us to play (Ephesians 2:10). The role we have in
the kingdom of God is one that no one else can occupy. Each role in the
kingdom is vital. There is no role that is more important than another
because God has woven all things together for his purposes—just like the
2Staub, Dick. “What Made in the Image of God Really Means.” Relevant, March
4, 2013. http://www.relevantmagazine.com/god/deeper-walk/features/23549-qmade-
in-the-image-of-godq.
34 A. R. BRADLEY
intricate working of the human body. Paul explains this in I Corinthians
12:5–7:
There are different kinds of gifts, but the same Spirit distributes them.
There are different kinds of service, but the same Lord. There are different
kinds of working, but in all of them and in everyone it is the same God
at work. Now to each one the manifestation of the Spirit is given for the
common good.
We are made in the image of God, but we do not have the same capacity
or power or holiness as God does, so we face limitations. This was true
before the fall of man. We each have twenty-four hours in a day and
limited means and knowledge to accomplish everything we desire. This
was true before our sin, and it is true and exacerbated after our sin. Adam
and Eve had to tinker and learn and think and develop skills. They were
finite just as we are.
Our limitations are the reason we must come together through eco-
nomic exchange if we want to make kingdom-building contributions to
the common good using our creativity: we cannot do that in isolation.
We will all surely perish if WE can only rely on ourselves or even a small
circle of people. If we must figure out how to produce all the things we
need and desire, we are left with little and so are others. However, if we,
through community, have the space to cultivate and develop our skills,
we can learn and improve and then are better able to serve others. That
community is brought together through exchange and allows us to fulfill
God’s desires for his creation.
Integrated into creation is a great truth of the created universe that is
often overlooked. The word that best describes God’s creation is inter-
dependence. From the very beginning, a distinct connectedness has tied
all of creation together. Before sin entered the world, everything worked
together in perfect harmony. Today, we still witness the interconnected-
ness of creation, even though it is fraught with the frustration of sin.
Despite sin, we know that God is working all things together for good
for those that love him and have been called according to his purpose
(Romans 8:28–30). We are here to fulfill God’s purposes, which he has
predetermined from before the beginning of time.
3 BIBLICAL STEWARDSHIP AND ECONOMIC PROGRESS 35
Purpose and Creativity
On the sixth day of creation, when God declared it “very good,” all the
necessary elements were present to work together for his purposes. There
is an explicit, observable, and intentional way that all these things work
together.
They function, operating in harmony, beauty, grandeur, and abun-
dance. When God’s creation works in the integrated and harmonious way
in which it is intended, it points back to God and glorifies him, shalom is
the result. Shalom is a word that is often translated as “peace” or the
absence of conflict, but it has a much richer meaning. Shalom means
universal flourishing, wholeness, and delight. It is the way things ought
to be. The Old Testament prophets pictured shalom as the wolf living
with the lamb, weapons turned into farming tools, deserts blooming, and
the mountains streaming with red wine (Isaiah 2:4, 11:6; Ezekiel 36:35;
Amos 9:13).
Each element of creation has an interconnection with all the other ele-
ments. Humans reflect something different about God’s creation. We can
reason, think, and decide between many alternatives. We do not strictly
operate out of instinct. We are here to do much more.
God would not give us the garden and tell us to cultivate it without
giving us the tools we need. In Genesis 2, God continues by giving us
our marching orders and our mission. Humans have a special role in the
cultivating of God’s very good creation. We learn more about this in
Genesis 2:15: “The Lord God took the man and put him in the Garden
of Eden to work it and take care of it.”
This is our mission as thinking and reasoning human beings made in
God’s image. We are to do two fundamental things: work his garden and
take care of it. To take care of something requires putting work into it
and protecting it from destruction. If God asked us just to take care of his
garden, we would not alter it. One could imagine that we would stand
watch and make sure it remains as is; we would preserve it. In caring for
the garden, we might prune it, but we would not be “working it” in the
way God asks us. The word “work” in Hebrew as used in Genesis 2:15 is
the verb abad, which means “to work or to serve.”3God explicitly asks us
to work his creation and serve him. He tells us to “be fruitful and increase
3“Strong’s Hebrew: 5647.בע ד (abad)—To Work, Serve.” http://biblehub.com/
hebrew/5647.htm.
36 A. R. BRADLEY
in number; fill the earth and subdue it” (Genesis 1:28). God desires us
to multiply, prosper, cultivate, and enjoy his good creation. This is our
ultimate purpose, also known as the cultural mandate.
Shalom and Flourishing
With all the diversity across humanity over thousands of years, one might
not expect to find many unifying ideas. Remarkably, there seems to be
one meta-concept that transcends all worldviews. Jonathan Pennington
writes:
This concept has staying power and universal voice because it addresses
what is most basic and innate to all of humanity, despite the diversity of
race, culture, and values. It is a concept that proves to be the motivating
force and end goal of all that humans do and think. This idea or theme
can be identified as human flourishing … The desire for human flourish-
ing motivates everything humans do…All human behavior, when analyzed
deeply enough, will be found to be motivated by the desire for life and
flourishing, individually and corporately.4
While no two humans are the same, all hearts have the same intrinsic
desire. We are all created in the image of God with the desire to know
him, to flourish, whether we acknowledge this or not. It is a universal
truth that has been written on our hearts. It is part of our nature and our
design, and as such it transcends trends and culture. Ecclesiastes 3:11 says:
“He has made everything beautiful in its time. He has also set eternity
in the human heart; yet no one can fathom what God has done from
beginning to end.”
The desire to flourish is written deep within our souls.
This idea of human flourishing is the Old Testament Hebrew concept
of shalom mentioned previously. Cornelius Plantinga in his book, Not
the Way It’s Supposed to Be, defines shalom as: “The webbing together
of God, humans, and all creation in justice, fulfillment, and delight…
4Pennington, Jonathan. “A Biblical Theology of Human Flourishing.” The Institute
for Faith, Work & Economics, 2015. http://tifwe.org/resources/a-biblical-theology-of-
human-flourishing-2/.
3 BIBLICAL STEWARDSHIP AND ECONOMIC PROGRESS 37
Shalom means universal flourishing, wholeness, and delight … the full
flourishing of human life in all aspects, as God intended it to be.”5
One of the titles we see in the Old Testament for Christ is the Prince
of Peace, but what the passage really says in Hebrew is that Jesus is the
Prince of Shalom (Is. 9:6). Jesus is not just a prince that will come back
and stop all the fighting; he is the prince who will come back and restore
universal flourishing. His work as the Prince of Shalom “means complete
reconciliation, a state of the fullest flourishing in every dimension–physi-
cal, emotional, social and spiritual.”6The redemption brought by Christ
is about restoring everything to the way it should be. Shalom bookends
human existence. It characterizes the Garden of Eden (the way it was sup-
posed to be) and the eternal City, the New Jerusalem (the way it is going
to be), and so provides the vision for our existence in between.7
The word shalom is used approximately 250 times in the Hebrew
Bible, with the majority of uses describing biblical flourishing. For exam-
ple, shalom is the climax of the Aaronic or priestly benediction in Num-
bers 6:24–26, looking forward to the ultimate blessing from God: “The
Lord bless you and keep you; The Lord make his face to shine upon you,
and be gracious to you; The Lord lift up his countenance upon you, and
give you shalom.”
The work that God designed for us to do before the onset of time
brings about greater levels of flourishing by advancing creation toward
shalom, the way things were supposed to be. This happens despite our
sin because God is at the helm of the redemptive process. Our sin does
not change God’s design or desire for his creation. Our sin just makes
our job rife with frustration and sin.
Genesis reveals God’s ultimate purposes: his glory and the flourishing
of his creation. In this, our goal is stewardship (prudent cultivation) of all
we are and all we have, all the time.
Stewardship comes from the Greek word oikonomia, which appears
in the New Testament. It is a Greek compound word that is translated
5Plantinga, Cornelius. Not the Way It’s Supposed to Be: A Breviary of Sin. Grand Rapids,
MI: Eerdmans Publishing, 1995.
6Keller, Timothy. Generous Justice: How God’s Grace Makes Us Just. New York, NY:
Dutton, Penguin Group, 2010.
7Whelchel, Hugh. How Then Should We Work? Rediscovering the Biblical Doctrine
of Work. Bloomington, IN: West Bow Press, 2012. Strong’s Greek: 3622. o„κoνoμ´
ια
(oikonomia).
38 A. R. BRADLEY
as the “management of household affairs, stewardship, and administra-
tion.”8We often think of the word stewardship as synonymous with
tithing, church service, or missions. This is a narrow, insufficient under-
standing of stewardship. God cares about your decisions regarding all of
your resources—time, money, skills. For our hearts to be fully committed
to God’s purpose, we must have a proper understanding of what God asks
of us. God is not asking us to steward part of our income, talents, and
time.Heisaskingustostewardall of it. The idea of wholeness is vital for
stewardship; a whole-hearted commitment to God’s purposes must fuel
our interests and drive our daily purposes such that we are continually
aligned with His desires.
Deuteronomy 6:4–5 gives us this command: “Hear, O Israel: the Lord
our God, the Lord is one. Love the Lord your God with all your heart
and with all your soul and with all your strength. This commandment is
known as the Shema, which means ‘hear.’”
Theologian Scott Redd writes that wholeness is the goal of redemption
in Christ. Redd states that the above verse is not about loving God “a
lot”; it is about how our relationship with God should infiltrate every
part of our lives.9Jesus says that “where your treasure is there your heart
will be also,” so to be good stewards God must govern our heart, soul,
and strength (Matthew 6:21). Our external choices follow.
Being good stewards, or whole-life stewards, can only come after God
changes our hearts and we give our entire person to Christ. Only then
can we change what we treasure. All our choices flow from our desires,
so we must continually align our desires with God’s desires. The social
and economic order then must be buttressed by an ethos of creativity
and respect for individual and property rights.
At its core, stewardship is about making choices, and making choices
is the science of economics. Making decisions that please God is our goal
as God’s stewards. Every day, we must choose from many options, and
each choice imposes a tradeoff and long-run consequences. Stewardship
requires us to embrace the principles of economic thinking that stem from
the principals of scripture and human anthropology.
8Stewardship, Administration. Strong’s Greek: 3622. o„κoνoμ´
ια(oikonomia)—Steward-
ship, Administration. http://biblehub.com/greek/3622.htm.
9Redd, Scott. Wholehearted: A Biblical Look at the Greatest Commandment and Personal
Wea l th. McLean: The Institute for Faith, Work & Economics, 2016.
3 BIBLICAL STEWARDSHIP AND ECONOMIC PROGRESS 39
Oikonomia: Stewardship
and the Economic Way of Thinking
Our sin, our finite knowledge, and our hubris make it difficult. We are
constantly the victims of our own sin. Therefore, it is imperative to under-
stand our origins; understanding how we got here and why we are here
is critical for making God-honoring decisions. We have been given all the
resources we need to accomplish what God asks of us. Now we must
assess the necessary operating environment for success.
The parable of the talents is a helpful metaphor for what God asks of us
as it relates to fulfilling his desires. Matthew 25:14–30 is important for our
discussion about God’s design and our role as whole-hearted stewards.
The passage of Matthew 25:14–30 is about maximizing productivity
using our creativity for the purpose of creating more than what previously
existed. The master asked each servant to take what they were given and
care for it according to his desires, essentially, to invest his resources to
make a profit. Greater profits of the individual level are a sign of good
stewardship and increasing productivity. We are asked to do the same.
Profit is about having something left over after one has invested time,
talent, and treasure. Remember Genesis 1: God did not ask Adam and Eve
to just watch the Garden of Eden; he told them to work it, to cultivate it,
to make it better. We practice good stewardship by carefully, thoughtfully
investing God’s resources to make the most out of them.
We get closer to shalom in the here and now because we participate
in bringing it about. We experience true joy when we do the very best
we can with what we have been given. In addition, God rewards good
stewardship with greater responsibility. There are spiritual and material
rewards to good stewardship, both now and eternally.
We can also see from this text that what God gives us is directly related
to how he uniquely crafted each of us. No two people are the same. We
have different gifts and propensities that are manifested in unique ways.
This means that we are all expected to steward in a wholehearted manner
but that each of us brings different gifts to the table. Some have “five
talents,” some have one, but we are all endowed with creativity and we
are expected to be put to the service of others and the common good.
When we put our creativity to use; we are then able to make positive
contributions to human flourishing. This requires prudence, investment,
an eye toward the future, a focus on problem-solving and a mechanism
40 A. R. BRADLEY
that fosters each one of us to look beyond a narrow view of our self-
interest to also serve others. All of this requires leftovers or residual assets.
If we use up all our time, energy, and talent in the pursuit of mere survival;
it is difficult perhaps impossible to have any residual to invest in others.
It is only when we have something left over that we have more to give.
Abundance is a good thing: not for its own sake but because it glorifies
God. Abundance means that we have more than we need in one moment:
more time, more energy, more nutrients, more talents. Leftovers provide
the sustainable base for service, resourced generosity, and investment.
The costs of not doing this well are tragic. We suffer and become alien-
ated from God, making things harder for both ourselves and others. It is
because we are interdependent that the consequences of our actions are
not isolated. They have ripple effects on others so there are social con-
sequences when each individual person cannot or is restrained from fully
using their talents. Leftovers give you additional opportunities to serve.
Without profit, we do not have extra to give. Profit is also a signal that
we are doing a good job. When we have leftovers, we are accomplishing
God’s purposes. Profits along with lowered opportunity costs yield greater
levels of wealth. What we require in a flourishing society is to have the
appropriate incentives so that personal wealth is tied to advancing the
social or common good. Profit is the mechanism which when pursued in
a mutually inclusive way we are induced to be the best stewards possible
given our constraints.
The market economy makes the profit signal the center of produc-
tive entrepreneurial activity and induces those entrepreneurs to find ways
to discover new ways of doing things and to solve problems. The profit
that is pursued within biblical parameters is objectively good. In Jeremi-
ah’s (Jeremiah 29:7) letter to the exiles he tells the exiles to “seek the
peace and prosperity of the city to which I have carried you into exile:
for if it prospers, you prosper.” Biblical prosperity is mutual, it is inclu-
sive and extends to all members of society. It is not exploitative or greedy
or corrupt. All humans have the potential for this harmful behavior, but
we need an environment that best allows us to seek mutual prosperity
through the pursuit of monetary profit. We live in a world where this has
been achieved by many nations to a large degree, it needs to be extended
to everyone.
3 BIBLICAL STEWARDSHIP AND ECONOMIC PROGRESS 41
There is a path of biblical flourishing, and material well-being is an
aspect of that accomplishment. To do this, there are necessary require-
ments to which individuals and society must adhere. In this sense, eco-
nomic realities must be respected and obeyed when we attempt to live in
the social world.
Economic Realities and Human Anthropology
Economics is a science that studies human decision-making under con-
ditions of radical uncertainty. Humans are finite and fallible; we try to
maximize our own utility amid great ontological uncertainty. We pursue
our own interests but that does not mean we know what to do or how
to do it in the most productive manner. For this, we need to rely on the
skills and talents of others. Our self-interest guides our choices but that
self-interest can be used, under the right incentives and institutions, to
serve others and generate greater societal well-being. To induce people
to maximize their own value in a way that also maximizes the common
good in the service of others we must also assess the requisite economic,
political, and legal institutions that respect these realities.
The most accurate understanding of economics was eloquently
explained by economist Ludwig von Mises in 1949 in his seminal work,
Human Action.10 Mises defined economics as the science of purpose-
ful human action. In our context, economics is the science of making
God-pleasing decisions. If economics is about human action, what drives
humans to act? Three things need to be in place for us to act with pur-
pose: we experience a state of uneasiness, we have a vision for an improved
outcome, and we take conscious and purposeful steps to get there. This
does not imply that we engage in this process without error or sin, rather
that we are purposeful and each of us takes the steps we deem appropriate
to improve our conditions.
Mises understood the nature of man. He saw men not as prepro-
grammed atomistic robots but as flawed and finite individuals with pur-
pose.
Human Action was written at an important time both in global history
and inside the economics profession. The Bolshevik revolution occurred
10 Mises, Ludwig von. Human Action: A Treatise on Economics. Auburn, AL: Ludwig
von Mises Institute, 2008.
42 A. R. BRADLEY
in 1917 and the Soviet Union was under communist control. Simul-
taneously, some economists, such as Oskar Lange and Abba Lerner,
were advocating for the superiority of socialism over capitalism. Later
John Maynard Keynes, whose economic theory rested on the volatility
and unpredictable nature of market economies, advocated for govern-
ment intervention as a stabilizing mechanism. American economist Paul
Samuelson maintained in his mainstream textbook Economics in 1961 that
Soviet economic growth would surpass U.S. economic growth. He main-
tained this position until the 1980s, just pushing back the dates of the
Soviet eclipse of the U.S. economy. That market socialism was consid-
ered feasible and that “persistent market failure” was mainstream belief
made government management of the economy, in some shape or form,
the widely held view through the twentieth century. Market socialism is
embraced again today and some “managed planning” seems feasible and
perhaps attractive. Today it is still attempted in varied forms either total
economic planning which we see in modern Venezuela or attempts to mix
some market operations with authoritarian control as in modern China.
Mises saw that even with the best of intentions, central planning disre-
garded vital elements of human nature and that human choice was con-
textually dependent. Humans were able to obtain higher levels of wealth
and societal well-being under the institutional arrangements predicate
upon prices, property rights, profit, and loss. Hayek demonstrated that
under alternative institutional arrangements devoid of these characteris-
tics, human immiseration persisted and poverty remained. Central plan-
ning advocates ignored the very elements that Mises understood as criti-
cal to human choice. To disprove that central planning is an appropriate
economic order which could advance human flourishing, one must begin
with the nature of human choice and the realities of humankind.
It is no accident that history proved Mises right, and 49 years after
the release of Human Action, communism as the world saw it unfold in
the Soviet Union failed. Its 71-year reign, which tried to divorce humans
from their God-given purpose, killed millions and impoverished more.
When we reflect on the language in Genesis and God’s creation, we see
that this was not his original desire for humankind but rather led to mass
immiseration. The picture in Genesis before the Fall is one of abundance,
both spiritually and materially. In contrast, the former Soviet Union as
well as modern-day Venezuela or North Korea pitted man against himself
by defying man’s nature and, in its wake of horror, a godless and poor
society worked hard for survival.
3 BIBLICAL STEWARDSHIP AND ECONOMIC PROGRESS 43
Mises and F. A. Hayek fought the central planners intellectually in the
twentieth century but they stood on the shoulders of those who have
gone before including the sixteenth century School of Salamanca. It was
their important theological contribution to the science and discipline of
economics that paved the way for the future of market process theory.
The sixteenth century School of Salamanca made reformulations of the
concept of natural law and statements on the right to possess private
property and benefit from the ownership of the private property. These
theological contributions to the science of human action would be car-
ried forward later to Carl Menger, the founder of the Austrian School
of Economics. The resulting economic theory has extraordinar y explana-
tory power because it begins with a proper understanding of human
anthropology. People are purposeful in their actions; they desire some-
thing better and act to remedy their current conditions. From this, we
can understand the everyday economic realities that confront us every
time we engage in this calculus of choice.
The human action model proposed by Mises makes sense only because
we must choose, and when we choose, we give up something else. We
have unlimited desires but limited means to satisfy those desires. We must
make choices, and when we choose, we face trade-offs that impose costs.
The cost is always relative for each person and for each decision because
we value things differently.
We live in a world of scarcity and we always have, even before the Fall,
because we are finite. We have never had infinite knowledge or power.
Sin exacerbated the conditions of scarcity by making everything more
difficult. Human discovery, entrepreneurship, and learning are all more
difficult than they were before sin. We still must choose, but those choices
are less transparent and fraught with our own sinful desires.
Effective and whole-hearted stewardship requires that we are fully
aware of our nature and our constraints and these are the realities of
human action that can be divined from scripture and observation: scarcity,
subjective value, self-interest, incentives, and interdependence.
The idea that we value things differently comes from our uniqueness.
We subjectively value things based on our preferences and needs because
we are all made with unique gifts and desires. Based on God’s intentional
design, we value things differently. Subjective value is a characteristic of all
people because it is part of how God made us. We have different desires
that work their way into what costs we are willing to bear to acquire
44 A. R. BRADLEY
certain things. Our varied subjective values result in many options that
exist to serve a wide range of different tastes and preferences.
What we value is driven by our unique makeup, personal preferences,
and our circumstances at the time. The world is better when there are
more options at a lower cost. Having more options satisfies more prefer-
ences, lowers costs, and increases quality. As a result, we all profit more
and have leftover resources and time to devote to other pursuits.
Subjective value drives our choices or our personal interests and pref-
erences. It simply means that we each value things differently. There is
no good or service that has objective value but rather, individuals assign
values to things. Each of us assigns values differently based on our pref-
erences. What we view to be in our self-interest is inextricably linked
to what we prefer or value. The idea of self-interest can make believers
recoil as it is often confused with selfishness. In some way, self-interest
is a more benign concept; it is the mechanism of human choice. The
Misesian human action model asserts that choice is motivated by discom-
fort. The subjective value determines the “terms” of choice, and we only
choose things—out of self-interest—that we prefer over not having them.
When we dismiss the notion that our lives are all about God and we put
ourselves first, our subjective value can become selfish, more focused on
what we want, not what God wants. Consequently, things become more
difficult for us. We again become victims of our own sin, and the things
we think are good for us harm us. Self-interest then involves sacrifice or
surrender of my will to God’s will. The closer we get to God through
prayer and reading his Word, the more we recognize the depth of our
sin. Yet, we can still daily seek to surrender our lives to his will with every
choice we make.
Self-interest is the mechanism of human action. What we perceive as
“good” will orient our motives and drive our choices. We believe that we
can partake in an action by choosing between alternatives and in doing
so, will make ourselves better off. Because we are human, self-interest can
lead to bad choices and actions, but it doesn’t necessarily result in greed
or coveting. Self-interest can and does involve sacrifice. It may be in one’s
interest to give up habits that are harmful, to work hard, and forgo leisure
time, to sacrifice one’s life for a family member. Greed never involves sac-
rifice. We need a society where greed is mitigated (not fueled by a system
of incentives) and where self-interest encourages us to partake in profit-
making activities that also result in the service of others. Greed is unmiti-
gated desire, a state of being in which one will steal, lie, cheat, and exploit
3 BIBLICAL STEWARDSHIP AND ECONOMIC PROGRESS 45
to obtain any and possibly every whim or desire. Greed is thoughtless and
harmful. It is important to remember that when ordering a society, we
cannot solely concern ourselves with the incentives that ordinary people
face, but the incentives that political leaders and those in power face. If
we want political leaders, like those in North Korea, or China to change
their behavior, we must focus on how to change the incentives they face.
In the market, entrepreneurs who are both fallen and fallible are directed
by the signals of profit and loss. These signals induce the entrepreneurs
into activities that unleash their ideas in the service of other, ordinary
people, whom they will never meet. Thus, markets do not require benev-
olent individuals with perfect foresight to plan economic activity but are
rather guided by the interests of others in the pursuit of their own gain.
These incentives guard against systemic failure because the losses, which
are directed by consumers, are avoided. Prices provide these incentives
and profit and loss direct behavior by serving as a feedback mechanism.
For all of this to work well, we need proper incentives. For the believer,
these incentives are pleasing God. When we seek to please God in all
that we do, when we ask him to be present with us in every choice, we
can better steward our scarce resources for his glory, and he blesses our
efforts. When we act out against God’s will and his good design for us,
we face frustration; we are pursuing a way the world was not meant to
be. Receiving the richness of God’s pleasure and blessing based on our
obedient stewardship is the ultimate incentive, born out of our response
to God’s love and grace. Humans will not act without a motive; they must
be propelled by their purposes to act. Then, when presented with choices
we can reason through our alternatives and their consequences, although
this process remains difficult. As the parable of the talents demonstrates,
the pleasure of the master is the ultimate incentive.
The last economic and human reality we must assess is our interdepen-
dence. We are made in the image of God but are limited and finite in
ways that he is not. We cannot do most things that we need to survive,
and this was God’s intention. God designed his people to be in com-
munity and to rely on each other’s gifts and talents. Our limited nature
and our diversity bring us together through trade, allowing us to thrive.
I go to work and trade my time for income. I can use my income to
purchase any variety of consumer goods relative to my budget. Human
well-being and prosperity is advanced when I can get more for less: when
housing, healthcare and food and shelter needs can all be met with better
46 A. R. BRADLEY
and better products. When those products are not solely available for con-
sumption by the rich but across all income quintiles through the process
of market competition—then we can realize a system where we can each
go to work and use our gifts to serve (recall the use of the word abad in
the Hebrew translation of Genesis 2:15) our fellow human beings. The
extended order of the market economy also ensures that those benefits
do not remain isolated or localized, but through global trade are carried
across the globe. It is the extension of the market economy which is pred-
icated on our need for trade and our desire to serve others that has lifted
the masses out of poverty at exceedingly high rates. World poverty has
been cut by 36% since 1990 and the world poverty rates continue to fall
at rapid rates. Today for the first time in human history, the global abject
poverty rate (those living under $1.90 per day) is less than 10%.
It is global trade and widening circles of exchange that has allowed this
to happen. Trade includes those who have been excluded. It gives them
access to goods and services that they formerly went without or obtained
on their own. Trade fostered by market entrepreneurship is inclusive and
extends its benefits in egalitarian ways, as evidenced by the rapid decline
in poverty. This system of trade is essential for flourishing, and it is only
made possible when we can depend on each other. Trading based upon
on subjective value allows us to be free to do what God created us to
do. We don’t have to figure it all out because we were not made to do
everything. Only God can do that.
Trade allows us to profit in our time while lowering all our costs. As we
discussed, when we make a choice, we always bear a cost. The cost is the
forgone opportunity at that moment in time, known as the opportunity
cost. Trade brings strangers together to serve each other. For this to work
well, we need a society that embraces the biblical principles of peaceful
cooperation. Markets are an important aspect of that society buttressed
by limited and peaceful government, extended cooperative international
relationships, the rule of law and a robust civil society empowered by
religious freedom, political freedom and economic freedom.
An extended cooperative and prosperous social order requires a
market-based society predicated on property rights, profit and loss, prices,
and the rule of law. Property rights are a necessary incentive for trade.
Property rights also provide the basis for the emergence of prices. As
prices fluctuate, they help us evaluate what we want based on our sub-
jective values. Prices change based on changing scarcity levels and when
they do, we reevaluate each choice, all in the pursuit of profit. Property
3 BIBLICAL STEWARDSHIP AND ECONOMIC PROGRESS 47
rights give us boundaries, establish and protect our ownership rights, and
provide a basis for trade.
Prices also help us seek profit and avoid losses personally and in our
business ventures. When someone brings a product to the market, they
seek to make money and have residual resources left over. Profits and
losses are levied by consumers. The products and services available to us
are only available if they are profitable. They are only profitable if they
serve the needs of the consumer in some way. Profitable products and
services free consumers from figuring out how to do those things on
their own. Prices then provide information that we could never acquire on
our own. Where prices exist, we are already better off than we would be
without them; we have a benchmark to evaluate trade-offs and economize
on our time.
This complex system of trade requires the rule of law. The rule of law
means that everyone is treated equally before the law, that the law is trans-
parent, laid out in advance, and that the leaders must submit themselves
to it. The rule of law prohibits arbitrary behavior on behalf of rulers and
allows for predictable behavior on behalf of everyone.
F. A. Hayek, in his famous book The Road to Serfdom, warned that as
the state plans more of people’s lives, we begin to shred the rule of law.11
As a state takes over more economic activity, society converts into a law
of specific and exclusive rules rather than the rule of law. There is debate
in the economic literature regarding how much government intervention
in an economy leads to such disastrous results and certainly most of the
world lives in what we would deem “mixed economies.” For Hayek, and
for our consideration, the relevant question is the role of government
as it pertains to human flourishing. Beyond that role, the quintessential
question of political economy is how to constrain the state from grow-
ing larger and dominating more of the private sector. Leaders will start to
change the rules to suit their will rather than submit their arbitrary whims
of power to a preexisting set of rules. This happens precisely because the
state does not have any idea how to order economic affairs. They don’t
know what types of products various consumers want nor could they fully
comprehend the production process and the relative trade-offs to under-
stand how to bring goods to consumers. Nor do they have the incentives
(profit and loss) to learn how to bring these items to the consumers that
11 Hayek, Friedrich A. von and Bruce Caldwell. The Road to Serfdom: Text and Docu-
ments. Chicago: University of Chicago Press, 2007.
48 A. R. BRADLEY
need and want them at the lowest possible cost (the hallmark of prudence
and stewardship).
Without the rule of law, we lose predictability of state behavior. One
cannot have confidence that state agents will not break into their property
and steal all of their possessions. The rule of law limits the state’s ability to
plunder and to infringe on our ability to choose as God directs us. When
we live in a society with the rule of law, we can make plans, for living out
God’s desires in our life. If God is calling you to open a business or a
church, property rights and rule of law will make that much easier. You
can raise money for investments in buildings and businesses. The rule of
law is essential for well-protected, well-defined, and transferable property
rights. In early Christianity the rule of law was not broadly operationalized
in society so not everyone benefitted from the benefits of well-protected
property that applied equally to all in society. Society loses when property
rights and protections are not established with generality and accessibility
to all citizens.
When we have property rights and the rule of law combined with polit-
ical, religious, and economic freedom,12 we can pursue God’s purposes
as they pertain to our unique lives. When any of these three freedoms are
limited, we are less free to be wholehearted stewards.
Conclusion
We must understand God’s purposes for life as he wishes and be the best
stewards we can with what he has given us both individually and collec-
tively. We are designed to live among each other and serve each other.
We never were designed for atomistic individualism. When we can order
society in a way that allows us to rely on each other, to embrace our inter-
dependence, then we have the best chance, through our work to serve
one another and make lasting contributions to human flourishing and in
doing so help each other and glorify God.
We require an[d] extended social, economic, and political order that
allows each person, created with dignity, to unleash their human creativ-
ity as God leads them. This necessitates a market economy where dis-
persed individuals can discover, learn, and through the system of profits
and losses can find ways to serve one another. When society is predicated
12 Gwartney, James, Robert Lawson, and Joshua Hall. Economic Freedom Dataset.
Report. Frasier Institute, 2015. http://www.freethe-world.com/datasets_efw.html.
3 BIBLICAL STEWARDSHIP AND ECONOMIC PROGRESS 49
on these realities of human nature and scarcity of resources it is best posi-
tioned to make kingdom-building advances to human flourishing. All of
this suggests that there is a path to prosperity and a path that pushes soci-
eties away from prosperity. When societies are ordered in ways that ignore
human nature and try to order economies from the top-down, immis-
eration follows as is evidenced by the devastation of centrally planned
economies in the twentieth century including but not limited to: Mao’s
China, Stalin and Lenin’s Soviet Union, the Khmer Rouge in Cambo-
dia, and Tito’s Yugoslavia.13 This phenomenon is not a historical artifact
or dated history that somehow, we have overcome. Today’s Venezuela14
and North Korea provide extreme examples of twenty-first-century exper-
iments with top-down planning—they lead to human misery and diminish
the capacity for ordinary people to provide for their families and commu-
nities—people are forced inward to merely focus on survival and many do
not.
But what about modern-day China? China in just 40 years with lim-
ited economic reforms has lifted almost 800 million of its citizens out
of abject poverty.15 China has gained economic freedom since the late
1970s and now is a place where global corporations flock to open manu-
facturing plants which provide jobs and opportunities for those who very
recently were destined to subsistence farming. The extension of global
markets to China is allowing the Chinese to experience their own Indus-
trial Revolution in a much shorter time that the West first experienced
it. These are good things and they include in global markets people who
were forever excluded. But can China maintain a mixed economic and
political strategy of limited market economies and authoritarian political
control? It remains to be seen what the future will be for China. Now it is
characterized by the World Bank as an upper-middle-income country that
is transitioning to a market economy.16 This is the greatest hope China
13 Rummel, R. J. Death by Government: Genocide and Mass Murder Since 1900. Rout-
ledge, 5th Printing Edition, 1997.
14 Today, Venezuela ranks last in the world in Economic Freedom and is expected to
experience an inflation rate of one million percent. Mass emigration, rioting and empty
shelves are the norm. The government continues to vie for control and pacify the popu-
lation, it’s latest attempt with yet another minimum wage hike. None of this has helped
the economy or it’s people.
15 The World Bank in China. http://www.worldbank.org/en/country/china/overview.
16 Ibid.
50 A. R. BRADLEY
has ever had for sustainable human flourishing characterized by personal
liberty, but China isn’t there yet. It is quite possible that advances in
economic freedom that have already been obtained will pave the way for
more economic freedom and political freedom, but there is no guaran-
tee. Milton Friedman and F. A. Hayek hypothesized, which is supported
empirically, that economic freedom is a necessary but not sufficient con-
dition for political freedom.17 Meaning a free market economy is a nec-
essary but not sufficient condition for a country to transition to one of
liberal democracy and limited government.
China could easily lapse back into a fully planned economy and with
it will lose the precious gains its citizens have obtained. When political
leaders attempt to “design” society in a way that they think will benefit
them the most, economic failure most often results. There is a path to
prosperity and it requires a market economy which best, although not
perfectly, allows for maximizing biblical human flourishing. The ethos of
freedom, human agency, property rights, service, and the common good
must be at the core of any economic order and then the incentives must
follow. This is the path for stewardship.
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Grand Rapids: Zondervan, 1994.
Gwartney, James, Robert Lawson, and Joshua Hall. Economic Freedom Dataset.
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Hayek, Friedrich A. von, and Bruce Caldwell. The Road to Serfdom: Text and
Documents. Chicago: University of Chicago Press, 2007.
Keller, Timothy. Generous Justice: How God’s Grace Makes Us Just.NewYork,
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Lawson, Robert A., and Jeff Clark. “Examining the Hayek-Friedman Hypothe-
sis on Economic and Political Freedom.” Journal on Economic Behavior and
Organization, 74, no. 3 (2010): 230–239.
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Economic and Political Freedom.” Journal on Economic Behavior and Organization,Vol.
74, Issue 3, 2010, pp. 230–239.
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Pennington, Jonathan. “A Biblical Theology of Human Flourishing.” The Insti-
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the permitted use, you will need to obtain permission directly from the copyright
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CHAPTER 4
Rationality and Alienation: Themes
from Gandhi
Akeel Bilgrami
Introduction
This is not intended as a scholarly paper on Gandhi’s philosophical ideas
on rationality and alienation. What I will seek to do instead is to construct
an argument from a range of philosophical claims that Gandhi made and
through that argument, I will explore conclusions that entirely square
with Gandhi’s thinking on ethics, politics, and political economy.
I’ll begin simply by briefly listing in no particular order four of these
philosophical claims in his writing and then proceed in the rest of the
paper with the construction of the argument, invoking these claims as
and when the stages of the constructed argument require them.
First, Gandhi took ethics to be a primarily perceptual discipline. In his
view, the world, the perceptible world we inhabit over and above con-
taining the properties that the natural sciences study, contains properties
of value and meaning that make normative demands on us to which our
practical agency responds. Such a view has recently been attributed to
Aristotle by the contemporary philosopher John McDowell, contesting
A. Bilgrami (B)
Columbia University, New York, NY, USA
e-mail: ab41@columbia.edu
© The Author(s) 2020
T. Akram and S. Rashid (eds.), Faith, Finance, and Economy,
https://doi.org/10.1007/978- 3-030-38784-6_4
53
54 A. BILGRAMI
the view of Hume and Adam Smith1that values derive entirely from our
states of mind (our desires and moral sentiments); rather such states of
mind are instead merely our affective responses to the perceived value
properties in the world around us. Aristotle is certainly not the source of
Gandhi’s perceptualist meta-ethics. His sources are the Vaishnavite tradi-
tions that he grew up in as well as the Bhakti and Sufi influences on his
thinking which took the world (including nature) to be sacralized and
thus suffused with value, as did a centuries long tradition of popular (if
not always high) Christianity.2On this view, values are not all made up
by us and our states of mind such as our desires and moral sentiments
as they were for Hume and Adam Smith. Instead, our states of mind are
responses to a world around us that contains values. Thus, for instance,
desires themselves are responses to desirabilities (or values) in the world
that we perceive around us. In other words, the world consists not just of
the properties that natural science studies but also normatively described
properties, desirabilities and undesirabilities such as, for instance, kindness
and cruelty, well-being or poverty, and our states of mind, our desires and
moral sentiments, are not the source of value but are merely responses to
these values that we perceive in the world.
1For Hume, see Enquiry Concerning the Principles of Morals, 1751. Online version may
be found at https://www.gutenberg.org/files/4320/4320-h/4320-h.htm. For Smith, see
The Theory of Moral Sentiments, 1759. Online version may be found at https://www.
earlymoderntexts.com/assets/pdfs/smith1759.pdf.
2References to this sort of understanding of value as having its source in a sacralized
conception of the world are peppered all over a very vast corpus of Gandhi’s writings
in letters, speeches, and dispatches to magazines such as Harijan and Young India.He
refuses to distinguish between animist traditions (or for that matter mystical Bhakti and
Sufi traditions) and Hinduism, and he dismissed such classificatory distinctions as a late
British taxonomizing that simply did not apply to India’s religious life. In response to a
question by a Dr. Chesterman, the medical secretary of the English Baptist mission, he
says, “…in spite of being described as animists these tribes have from time immemorial
been absorbed in Hinduism. They are, like the indigenous medicine, of the soil, and their
roots lie deep there” (Harijan, February 25, 1939). This sort of thing is equally true
of popular Christianity. It is frequently continuous with a variety of mystical, Gnostic,
and Neo-Platonist elements filled with references to a sacralized nature shot through with
value properties, and it is only a high Christianity of the seventeenth century that very
deliberately dismissed these popular Christian ideas as ‘dangerous enthusiasm’. For a good
discussion of this, see J.R. Jacob’s Robert Boyle and the English Revolution (Burt Franklin
and Company, 1977) and Simon Schaffer’s essay, “The Earth’s Fertility as a Social Fact in
Early Modern England,” in Mikulas Teich, Roy Porter and Bo Gustafsson (eds.), Nature
and Society in Historical Context (Princeton University Press, 1997).
4 RATIONALITY AND ALIENATION: THEMES FROM GANDHI 55
It is not as if Gandhi, in claiming this primacy of perception, denied
that there is ethical deliberation. Rather he thought that deliberation is a
secondary sophistication, it occurs either when we have conflicting percep-
tions of what the value-laden layout of the world demands of our practical
agency (or when we find that our initial or instinctive agentive responses
to those perceived normative demands are not adequate). It is only then
that the usual deliberative cogitations of ranking and weighing (or self-
critical reflection) are made necessary.
A second philosophical claim needs to be negatively formulated, a
point really about what is conspicuously missing in Gandhi’s philosophical
outlook. It is remarkable that though he thought long and hard about the
nature of politics, he never took the ideals of liberty and equality, as they
were theoretically developed in the political Enlightenment, to be very
central in his understanding of the polity. And in this, though he never
deployed the analytical category ‘bourgeois’ in his writings, he shared an
attitude of indifference towards these concepts with Marx who, as we
know, dismissed them both as bourgeois ideals.3
And so—this is the third philosophical claim—to the extent that he
wrote about liberty at all, his conception of individual liberty was that
it was a form of self-governance. Individual liberty, for him, lay in each
one of us making decisions that shape our material and spiritual lives and
democracies are substantially (as opposed to merely formally) in place only
when individual liberty, so understood as self-governance, does in fact
translate into our shaping the world to be in accord with these decisions.
Finally, a fourth and large philosophical claim that was close to his heart
was to make the chief goal of politics and social life, the overcoming of an
increasing alienation that he thought was pervasively present in modern
societies, an alienation that owed chiefly, in his view, to an increasing atti-
tude of detachment in our relations and our perspectives on each other
and the world—where the opposite of detachment is not attachment so
much as engagement. He often expressed what he had in mind by such
detachment by asking the question: How is it that we have transformed
the idea of the world as not merely a place to live in but a place to mas-
ter and control? Realizing that this was too general and omnibus a way
of expressing the notion of alienation, he broke down that question into
more tractable questions, such as the following in particular: How is it
3See Karl Marx, On the Jewish Question, in Robert Tucker (ed.), The Marx-Engels
Reader (Norton, 1978).
56 A. BILGRAMI
that we have transformed the concept of nature into the concept of nat-
ural resources? How is it that we have transformed the concept of people
into the concept of populations? How is it that we have transformed the
concept of knowledges to live by into the concept of expertise to rule by?
And even, and this is startling for us who have been brought up on lib-
eral doctrine: How is it that we have transformed the concept of human
beings into the concept of citizens. Gandhi tries to dig deep here to show
that all these transformations are really, at bottom, the same transforma-
tion, in that they all reflect an increasing alienation and disengagement in
our outlook on the world—in our understanding of nature, human sub-
jects, and human knowledge. Though he was not a socialist, like Marx he
thought much of this disengagement of modernity owed to capitalist eco-
nomic formations and he thought at the time of his writing that India was
at the crossroads that Europe was in during the Early Modern period and
he was anxious that India not go down what he thought was a lamentable
path that Europe had from Early to Late modernity. It is striking, then,
that for all their large and well-known differences, in stressing alienation
and not stressing liberty and equality, he was Marx’s intellectual partner.
With these four claims in place, I’ll proceed now to the main body of
the paper and the construction of the promised philosophical argument
which will eventually integrate these seemingly miscellaneous Gandhian
claims.
A Counterargument Against
the Lockean Contract
In India recently there was widespread protest against the government’s
promotion of corporate projects via an ‘eminent domain’ form of dispos-
session both of the poor peasantry in various parts of the countryside as
well as of the foresters from the extensive commons which they inhabited
and which was their only source of sustenance. Against this protest, even
so humane an economist as Amartya Sen declared that ‘England went
through its pain to create its Londons and Manchesters, India will have
to do so too’.4Sen’s remark, which appeals to history, surprisingly fails
to notice how historically imperfect his analogy is. When vast numbers of
4Amartya Sen, “Prohibiting the Use of Agricultural Land for Industry Is Ultimately
Self-Defeating.” The Telegraph (Kolkata), 23 July 2010.
4 RATIONALITY AND ALIENATION: THEMES FROM GANDHI 57
people who eked out an agrarian life were displaced in England in order
to create its Londons and Manchesters, they moved in hardly less vast
numbers to other temperate regions of the world, mostly in fact to North
America, and set up life there as settler colonists. There is nowhere for the
poor of rural Bengal and other parts of India to go, except to its already
glutted metropoles where they have no future but to squat illegally in vast
unlivable slums ridden with poverty and disease, their drinking water pol-
luted, their children prey to mafia gangster recruitment, and where most
will be unemployed while some, if they are lucky, will get casual, part time,
and chronically impermanent employment. History apart, Sen’s analogy
may have had a point today, if the mobility of labour had some parity
with the mobility of capital. But in a time (ever since the dismantling or
remantling of the Bretton Woods institutions), when capital can fly out of
a nation at the press of a button while national immigration laws severely
restrict the mobility of labour, Sen’s analogy comes off as callously off
beam.
But it is not this failed analogy that I want to pursue so much as the
assumption that underlies his remark. In making that remark, Sen was not
just expressing a considered view that is widely held among economists
and social scientists, he was also revealing an instinct and assumption
widely taken for granted among the lay intelligentsia. What underlies this
assumption?
It may seem, at first sight, that what underlies it is a commitment to
some sort of ‘iron laws’ of history and political economy, whereby what
happened in Europe in the Early Modern period will happen everywhere
else, including Europe’s erstwhile colonies. It is sometimes said that a
certain rigid stagial reading of Marx had proposed something like these
laws. That is a vexed interpretative issue in the study of Marx. But in lib-
eral political doctrine, which is much more the framework within which
Sen writes, it is not any such determinism that motivates the assumption.
Rather, liberalism with its normative claims about rationality, presents the
underlying thought as not (or not merely) descriptive, but prescriptive:
‘What happened in Europe in the Early Modern Period must happen else-
where because what happened in Europe was rational.’
Let us explore this claim to rationality.
What social theory can be said to have established that it was rational
for Europe?
In the Early Modern period, one particular social theory argued with
clarity and with the force of the great intellect of its propounder for the
58 A. BILGRAMI
political rationality and therefore the historically progressive necessity of
the very incipient forms of capitalism that can be located in the privatiza-
tion of land out of the commons. This theory was contractualist in con-
ception, in particular the contractualist strand that owes to John Locke.5
The point of all social contract theory, whether Lockean or any other,
is to establish that in an originary scenario described as a ‘state of nature’
(or an ‘original position’) which is a pre-political condition, freely chosen
consent by a people to certain principles or arrangements to live by imme-
diately transforms those people into citizens, and the state of nature into a
polity—but it only does so, if the consent to those principles and arrange-
ments is demonstrated to be rational in a very specific way: the principles
and arrangements must first be freely consented to and second they must
make these people better off as citizens than they hitherto were as mere
people, prior to polities, in a state of nature.
In the contractualist strand I am concerned with the canonical scenario
has it that were someone in a state of nature to come upon a stretch of
land in the common and fence it and register it at an elementary form of
bureau that they set up for this kind of registry, then the land becomes
his. Suppose then that this is done by some of the people and they each
keep faith with the general requirement I mentioned above that this can
only be done if no one is made worse off and at least some are made
better off than they were in the state of nature, a requirement which they
then elaborate further by adding the following crucial clause: if those who
had done this were then to hire others at wages which enable them to live
better, then this too would be an arrangement that is rationally justified
since they too were in fact better off than they were in the state of nature.
Such was the explicit claim of the Lockean ideal of the social con-
tract (roughly an argument from Pareto-improvement) which went on to
became the cornerstone for certain political principles and arrangements
that came to be called liberalism in which among other things such as
free speech (except for atheists, heretics, and Catholics,…), private prop-
erty and wage labour were seen as progressive advances justified by the
mutual advantage or amelioration of all concerned (or in the limiting
case, amelioration for some and no resulting disadvantaging of anyone
else).
5John Locke, The chapter on property in the Second Treatise on Government (Mass
Market Paperback Publishing, 2008) is the locus classicus.
4 RATIONALITY AND ALIENATION: THEMES FROM GANDHI 59
When one asks the question, what in the historical context was moti-
vating the articulation of such a contractualist theory, the answer is that
the theory philosophically consolidated the system of enclosures which
had been practised by brute force for many decades earlier, and in doing
so it prepared the ground for it to become a form of right with law and
governance to back it up. The point was to present the political principles
and arrangements which justified the system of enclosures as a moral and
political achievement since it was implicitly based on a form of rational
and freely chosen consent.
Marx’s 27th chapter of Capital, which presented in detail the preda-
tory nature of such primitive accumulation in general, but also of the
enclosures in England in particular, had its premonitional anticipation in
the widespread protest against the enclosures among some of the radical
groups during the English revolution who pre-dated Locke but whose
protest on behalf of a quite different ideal of the collective cultivation of
the existing commons could be seen as seeking to preempt the claim to
rationality in Locke of such an implicit consent that he had attributed to
all in the originary scenario of a state of nature. Let me, then, construct
a specific counterargument against the Lockean contract and attribute it
implicitly (and, of course, anachronistically) to these dissenters as the the-
oretical source of their protest and as proposing instead an alternative
notion of consent. Thus someone like Winstanley could have been heard
as anachronistically saying to Locke: ‘The entire contractualist scenario
as you have presented it generates an opportunity cost. An opportunity
cost is the cost of an avoided benefit paid for making a certain choice.
That avoided benefit is the collective cultivation of the commons that is
prevented by the choice to privatize the land in your initial step in the
scenario. Once the step is taken, it is true what you say that those who
were hired for wages are better off than they were in the state of nature
but they are not better off than they would have been if the land had not
been privatized in the first place and if there was a collective cultivation
of the commons instead’.
The criticism is based on a relatively simple counterfactual. But despite
its simplicity, its theoretical effect is more complex and interesting
because, as I said, it proposes a quite different notion of consent than
the one that Locke assumes. Consent must now be viewed as a more
complicated act than Locke understands, it should be viewed as follows:
Whether someone can be said to have consented is not necessarily to be
viewed as this tradition proposes but rather viewed as what he or she
60 A. BILGRAMI
would choose in antecedently specified sorts of conditions that did not
obtain—in which case the entire Lockean tradition of thought may be
assuming that we have implicitly rationally consented to something which
we in fact have not.
If, in this way, we shift the focus of this imagined dispute between
the preemptive Winstanley and Locke to which notion of implicit con-
sent is at stake in the social contract, a further issue opens up about the
nature of freedom and coercion of the consent. Suppose that Locke were
to respond by saying: ‘I have offered a perfectly good notion of implicit
consent and I see no reason to accept yours’. Winstanley’s response would
then presumably have to be: ‘If you ignore my counterfactual and insist
that the sense of consent you have on offer suffices in the contractar-
ian scenario and that everyone has indeed implicitly consented in that
sense, then I will have to point out that the implicit consent you have
attributed in particular to those who are hired to work for wages, was
coerced by a condition that they could not avoid: their non-possession of
the land in the face of others’ possession of it. My alternative notion of
consent was articulated with the view to establishing that that condition
of non-possession in the midst of possession by others, should be seen
as avoidable. So, your insistence on your notion of consent, even despite
the assertion of my counterfactual, brings out in the open that possession
of the land by some and not others is a coercive condition in which the
latter has to “consent” in your sense of the term. And so the contractualist
tradition presents a coerced implicit consent fraudulently as a freely chosen
implicit consent’.
I had said earlier that a great deal of social theory presented the devel-
opments in political economy in the Early Modern period as advances in
political rationality; and it is their rationality which was invoked as the
basis for later claims that the rest of the world, including Europe’s erst-
while colonized lands, would have to inevitably adopt these rational politi-
cal and economic arrangements as a historically progressive and therefore
necessary form of development. But, if I am right, the entire claim to
the premise of the argument, i.e., to the rationality of the contractual
ideal that philosophically rationalizes historical developments in England,
depends on two things: (a) on what is consented to making one better off
and (b) the consent being freely made. However if the criticism attributed
as implicit in Winstanley’s dissenting stances is correct, these two conditions
cannot be satisfied jointly. The counterfactual notion of consent offered by
Winstanley’s implicit criticism makes clear that the first requirement has
4 RATIONALITY AND ALIENATION: THEMES FROM GANDHI 61
not been met, and if you simply deny the counterfactual notion of con-
sent, the other notion of consent fails to meet the second requirement
that the consent be freely chosen.
That, therefore, leaves these social theorists without their premise, to
say nothing of their conclusion.
But it would be too quick and premature to rest the counterargument
here. Why? Because Locke in the Early Modern period only began an
argument that I have been countering on behalf of the radical dissenters.
His argument, it might rightly be said by way of reply to my counterar-
gument, has been updated and fortified by more recent theoretical devel-
opments within the framework of liberal political thought that he initially
generated. Any counterargument against Locke would have to address
this subsequent fortification as well. What are these theoretical develop-
ments that provide the fortification of Locke?
The riposte to Locke that I put in the mouth of the preemptive dis-
senting voices in Early Modern England made counterfactual use of the
ideal of a collective cultivation of the commons. But liberal theory more
recently has deployed further conceptual resources to try and undermine
this ideal. So, let me now very briefly address one central strand of such
resources, which will allow me also to come to my Gandhian themes of
alienation and human subjectivity.
The Tragedy of the Commons
Perhaps the most standard resource that liberal theory relies on is the idea
and argument behind what has come to be called the ‘tragedy of the com-
mons’. Following Garret Hardin,6who wrote the seminal paper making
this argument (summarizing a long tradition of economic thinking), the
idea, roughly, is to raise as an intractable problem for any ideal of coop-
erative life, such as collective cultivation of the commons. The intractable
problem that is supposed to arise is that individual human psychology at
its most rational is required to behave in ways that undermine the collec-
tive by failing of the cooperation needed to keep it going. This is because
the collective ideal asks the individual to contribute resources (sometimes
restraint may be a negative form of contribution of resources, when the
goal is, say, to prevent overuse or over-cultivation of the common) that
6Garret Hardin, “The Tragedy of the Commons.” Science, 13 December 1968.
62 A. BILGRAMI
produce a benefit that is shared by and therefore divided over the whole
collective over the long run while the cost is borne immediately by each
commoner. If everybody does what is required of him or her, of course
everyone gains. But since one is in the [epistemic] dark about whether
others are contributing their bit of the resources demanded of them, one
is constantly stricken with the qualm that one’s contribution would be
wasted if others don’t do their bit. In such an understanding of the col-
lective ideal—which is extensively present in many liberal frameworks of
social thought—some individual commoner who decides not to cooper-
ate therefore is always at an advantage since the gains of non-cooperation
will be immediate and all for oneself and completely assured whereas the
gains from cooperating are long-term, dispersed over the whole group
and, above all as just said, always uncertain. Non-cooperation for him, as
an individual, would thus be rational. But the commons cannot survive if
each individual does this individually rational thing. It is doomed. Thus
the tragedy. So privatization is a better bet.
It is often said in critical response to this liberal argument that the
tragedy of the commons idea can be developed not in the direction of
providing a rational basis for privatization but rather to argue for the reg-
ulation of the commons and its collective use by detection and policing
and punishment of non-cooperation. In fact, Elinor Ostrom’s7fine ana-
lytical and extensive empirical study presents the principles for such reg-
ulation after a scrutiny of various commons and their governance in four
continents. Now, who can be opposed to such regulation? It is obviously
a good thing. There is no gainsaying that. But given the kind of thinking
that frameworks the liberal argument of the tragedy of the commons,this
criticism and reinterpretation of it is not getting at what is fundamental
in it because the idea of policing and regulation is susceptible to the same
considerations of the tragedy of the commons, one step up. Even if we
ignore the well-known difficulties of detecting many non-obvious forms
of non-cooperation, the fact is that mechanisms of policing and punish-
ment to prevent non-cooperation are also susceptible to the argument
that underlies the tragedy since the same dilemma can be raised for why
anyone should cooperate with policing and detection and punishment if he
can get away with not cooperating—by offering bribes, for instance, or
making mafia style threats against those who detect and police or those
7Elinor Ostrom, Governing the Commons (Cambridge University Press, 2015).
4 RATIONALITY AND ALIENATION: THEMES FROM GANDHI 63
who cooperate with the policing and detecting (such as witnesses), or by
[loopholing] the laws to make non-cooperation legal after all…all famil-
iar and pervasive phenomena in a wide range of societies, with the last of
these strategies most operative in societies that congratulate themselves
on have transcended political corruption exemplified by the other more
blatant strategies of bribes and threats. As a result, though we must obvi-
ously accept the idea of regulation as something we should certainly strive
to put in place, it may be worth probing whether the problem does not
lie much more fundamentally in its basic way of thinking and that can’t
be rectified by solutions like ‘regulation’ and policing, solutions which, as
I said, are in any case vulnerable to this thinking and therefore vulnera-
ble to the same strategy of argument that generated the ‘tragedy of the
commons’.
Short of a more fundamental critique, it may rightly be said that Locke,
anticipating these later arguments in favour of privatization, was correct
to see his version of the implicit consent of all contractors (possessors and
non-possessors of land) as rational, indeed even freely chosen if the contrac-
tors had an implicit or tacit understanding of the looming threat of the
‘tragedy of the commons’. The counterfactual-based notion of implicit
consent presupposed by the dissenters, by contrast, is precisely doomed
to such a ‘tragedy’, unless a more fundamental critique is provided of
the thinking involved in the very statement of the argument that there
is a tragedy that looms. Actually, I don’t even have to take a stand on
whether or not there are constraints internal to this way of thinking that
will ensure the rationality of cooperation. What I do want to do, however,
is to step back and present, from a more external perspective—and this is
really Gandhi’s perspective—what I think is revealingly wrong about the
whole way of thinking that underlies the argument of the tragedy of the
commons and thereby hint at an alternative outlook on the possibilities
for our political ideals. To provide this more fundamental scrutiny of this
line of defence of the Lockean social contract, I will have to, as I said,
step back first and setup a dialectic that looks to another very central line
of development in liberal political philosophy.
Liberty and Equality
It is a large and familiar curiosity that liberal doctrine, as soon as it artic-
ulated its two great ideals of liberty and equality, went on over the next
two centuries to theoretically develop them in a way that put them in
64 A. BILGRAMI
indissoluble tension with one another. The cold war rhetoric with one
side claiming to pursue liberty but damned by the other as pursuing it at
the cost of equality and vice versa by the other side, is only the crudest
and most publicly familiar symptom of this perverse development. The
tension was charted in far more sophisticated theoretical work for well
over a century before the cold war.
What generated the tension? The fault line lay in certain familiar fea-
tures of liberty that generated inequalities. There are a number of such
features but I just mention two. The most well-known and well-studied
feature is that the possession of property bestows a particular form of lib-
erty on its possessors (something justified by arguments such as the one
I just presented above from the social contract and fortified by tragedy
of the commons arguments) putting it structurally at odds with equal-
ity in ways that are so widely studied that I need not say anything more
about it just here. Marx was only its most well-known critic but a wide
range of other political traditions have linked the unconstrained right to
the accumulation and possession of property and wealth with the chronic
inequalities in our societies.8Another less studied and more interesting
and perhaps even (psychologically) deeper feature is what I will call ‘the
incentivization of talent’, also pervasive in liberal ways of thought and
taken for granted by virtually everyone within its orbit, and not necessar-
ily only theorists and intellectuals. Talent, in liberal theory, was initially
distinguished from the capacity for labour, which it claimed was evenly
distributed among people while talent was not. But with notions of lib-
erty as individual self-governance emerging in liberal thought, it was said
to be wrong to exclude talent as a source of individual liberty. Notions
of dessert, the right to reap the praise and reward for the productions of
one’s talent, became central to one’s exercise of self-governance. If one
did not allow praise and reward to the talent responsible for these produc-
tions, it would mean that one instead praised the zeitgeist for the produc-
tions, and that would be to deny the very place of individuals, seeing them
as mere symptoms of the zeitgeist in embodied human form, a depriva-
tion of the liberty and rights of individuals. Moreover, this liberty and
right via notions of dessert also generated the liberty and right of all others
to enjoy the productions of given individuals’ talents, productions which
were incentivized by the liberty attaching to their individual talent, to be
8For non-Marxist traditions, to name just three, see the anarchism of Proudhon, the
work of John Ruskin or of William Morris.
4 RATIONALITY AND ALIENATION: THEMES FROM GANDHI 65
as excellent as they could be. And all this generated inequalities in ways
that are too obvious to elaborate—since talent is not equally distributed,
making the reward of talent a right of individuals would inevitably lead
to inequalities.
Since these features and their effects on the two chief ideals of liberal
doctrine are so entrenched in defining what those ideals are, there is no
way to make the two ideals compatible without substantially revising the
meanings of the terms ‘liberty’ and ‘equality’ as they have come to be
theoretically elaborated in liberal theory. I am assuming here an insepa-
rability of theory and meaning of the sort plausibly argued by Thomas
Kuhn.9So, except as is sometimes done in shallow taxonomical exercises,
meanings in general cannot just be changed stipulatively and by fiat. The
terms or concepts to be transformed need to be embedded in doctrinal or
theoretical reformulations first (shifts of paradigm, as Kuhn called them)
before the revisions to meaning are plausibly made and if the new mean-
ings are to be non-arbitrary. How might this be done? It is here that some
of Gandhi’s ideas that I listed at the outset suggest one path on which one
might proceed.
So, here is how I’ve allowed myself to think of it.
A natural way of reading Gandhi is this: Because of the irresoluble ten-
sion between them in our inherited understanding of them, let’s remove
the ideals of liberty and equality from centre stage, where liberalism had
placed them, and put on centre stage instead an even more basic ideal,
never very central to liberal thought, and then, usher liberty and equality
back in later (from the backdoor, as it were), but now not as central—
rather merely as necessary conditions for this other more primitive idea that
is on centre stage. So understood, liberty may have some serious chance
of no longer being understood in the previous terms that put it in ten-
sion with equality. And, looking to traditions outside of the mainstream
of liberalism, whether it be Marx or Gandhi, an ideal that might be on
offer to take centre stage as being even more fundamental than liberty
and equality, is the ideal of an unalienated life.
What is this ideal of an unalienated life? Let me now try and spell that
out along lines that Gandhi instinctively formulated—keeping in mind the
eventual task I have set myself: that of defending the counterfactual-based
notion of consent of the dissenters against the particular way of thinking
9Thomas Kuhn, The Structure of Scientific Revolutions (University of Chicago Press,
2012).
66 A. BILGRAMI
that generates the tragedy of the commons that would sustain and fortify
Locke’s idea of a consent to a privatized economy.
An Unalienated Life
The first thing to note is that the term ‘an unalienated life’ is ambiguous.
One sense of it is the unalienatedness that came with the sense of belong-
ing that was made possible by the social frameworks of a period prior to
modernity. All political and social theorists—Marx and Rousseau are only
the most prominent—have tended to agree that whatever the defects of
societies prior to modernity were, alienation was not among the defects.
It is a malaise of modernity in particular. But the point remains that, as
is well known and widely acknowledged by the very same theorists, the
unalienated life of those earlier times was indeed marred by the oppres-
sive defects in those societies frameworks. (To say ‘feudal’ to describe that
oppression would be merely to use a vastly summarizing and somewhat
misleading category that we have all been brought up on.) It is precisely
those defects that the sloganized ideals of liberalism, Liberty and Equal-
ity, were intended as directly addressing. And I have argued that since
the methodological and theoretical framework within which those two
concepts were then developed made it impossible to so much as conceive
how they could be jointly implemented, we should no longer see them
as something to be directly deployed but rather as indirectly deployed—
merely as necessary conditions for the achievement of a quite different
(directly deployed) ideal—thereby transforming the concepts of liberty
and equality. Now, if the achievement of an ideal of an unalienated life
were to bring, in its wake—indirectly—conditions of liberty and equality
(however transformed), it is bound to be very different from the unalien-
ated life which is acknowledged to have existed in times prior to moder-
nity because the conditions in which it existed then were also acknowl-
edgedtobeacutelylacking in, precisely, liberty and equality. Thus, given
this rudimentary conceptual dialectic, what we need to show is how a
new framework that breaks out of the dialectic would solve [for] three
things at once—a transformed notion of liberty and equality, as I have
said from the outset, but also it would now seem a transformed notion of
the unalienated life. So, this is to be conceived as a holistically triangular
transformation—we overcome a certain conceptual-historical dialectic and
in doing so together and at once transform all three concepts that feature
in the dialectic.
4 RATIONALITY AND ALIENATION: THEMES FROM GANDHI 67
If this triangulated bootstrapping transformation of the notions of lib-
erty and equality and the ideal of an unalienated life in concert, all at
once, is the ambitious challenge to be addressed, a very general further
question is suggested. We have to ask, first, what can be retained of the
general idea of social ‘belonging’ of an earlier time in any revision of the
idea of an unalienated life for our own time? We know from the other
elements of the dialectic that the social belonging of an earlier time was
marred by the defects of a lack of liberty and equality, but we also know
from what I have said that the attempts to directly overcome those defects
were, in turn, marred by the fact that liberty and equality flowered in
conception within a social framework in which a highly individualized
notion of individual liberty that attached to talent and property made for
liberty’s conceptual incoherence with equality. That was the fundamen-
tal source of the shortcoming of the liberalism that emerged out of the
standard political Enlightenment. So it would seem to follow, then, given
this entire dialectic, to conclude that a concerted and triangulated trans-
formation of all three notions would have to find its first hook, find its
initial root, in individual liberty being conceived of in non-individualistic
terms. It is really its failure to be so conceived that led Gandhi to ignore
it in his understanding of politics, but if we were to find a way of thinking
of it in non-individualistic terms it would be quite of a piece with the ideal
of an unalienated life that Gandhi thought central to politics.
Liberty for Gandhi, I have said, is the idea of self-governance, the
power to make the decisions that shape the material and spiritual aspects
of our lives. If so, it would seem then that to transform the notion of lib-
erty in the way that we have just seen as being required, we would have
to envisage each individual as approaching these decisions not primarily
with her own interests in mind but the interests of others as well. Now,
the last few words of that last sentence express something utterly famil-
iar, a cliché, a piety. The critique of self-interest has long been with us.
Moreover, since my goal is to show the shortcomings of the argument
from the tragedy of the commons which is manifestly based on individual
rationality as conceived in terms of individual self-interest, it is not all that
interesting to just say that one is opposed to self-interest. But Gandhi
was not merely saying that one should be opposed to self-interest. He
was saying something more interesting for two reasons. First, he is saying
something that has not, so far as I know, been said very much at all and
certainly not been theorized very much. He is saying that what any such
68 A. BILGRAMI
critique of self-interest amounts to is the construction of a notion of lib-
erty. And second, he is saying, as I will very briefly expound below, that
the transcending of self-interest is not just a matter of putting aside one’s
interests, but of seeing the world right because for Gandhi ethics (and our
relation to values) is essentially a perceptual discipline. The point for him
was not really ethical, then, so much as cognitive, though unlike us in our
time, he did not see these as separate subjects.
Why is the first of these points so little known and developed? I repeat:
Because individual self-governance (i.e., liberty) has for so long been
viewed in individualistic terms. But what is it to have a non-individualistic
conception of individual self-governance? It is not group or collective
self-governance, which is a different notion (interesting in a different way)
but not relevant to liberty which is felt and exercised by individuals (and
indeed so is alienation undergone and felt by individuals). Rather, putting
together two of the philosophical claims in Gandhi that I began with, it
is something like this.
When we exercise our individual liberty in this new sense that is being
proposed, when we make the relevant decisions that amount to such self-
governance, we respond to the perceptually given normative demands
that the world (both the natural and the social world) around us presents
us with and to which our agency must respond. If this is right, then when
we make the decisions that contribute to our self-governance, we have
to see the world right, to see correctly what its normative demands are
and respond to those demands. So the point is in a sense quite literally
phenomenological. And now. if we add to this the demand that these per-
ceptions and responses to perceptions must be of a piece with the ideal of
an unalienated life, a further crucial insight is allowed—that to see these
demands of the world for what they are in an unalienated social life, each
one of our individual orientations on the world in perceiving the norma-
tive demands of its value-laden layout, has to be to something that goes
beyond the orientation in which our individual perspective is primary.
Consider a physical analogy that needs to be extrapolated to the social—
consider how when one is driving a car on the road (as opposed to say
when one is walking on the road) we orient ourselves perceptually to the
demands of the world ahead not from the point of view of one’s own indi-
vidual body (as one does when one is walking on the road) but from the
point of view something larger than one’s individual body, from the point
of view of the whole car. That orientation when extrapolated from this
physical or bodily example of the car to the social, should have a significant
4 RATIONALITY AND ALIENATION: THEMES FROM GANDHI 69
outcome. Even though it may involve the mentality and agency of individ-
uals, because they each exercise their liberty in perceiving and responding
from the point of view something larger, this non-individualistic orienta-
tion of each individual to the world (seeing the world’s demands from the
point of view of the collective), is bound to internally cohere with equal-
ity in its outcomes. For equality would on this picture not be seen as
something extra or further that is conceptually configured as something
to be navigated in terms of a trade-off with liberty, but rather as poten-
tially built-into the deliverances of the exercise of liberty itself,whenthe
exercise of liberty is the exercise of a mentality in this form of unalien-
ated agentive responsiveness to the normative demands of the ‘world’.
The point is not that liberty, so conceived, will actually deliver equality.
It cannot be a sufficient condition in that way. The claim was never one
of sufficiency. Other conditions are bound to be necessary to suffice for
equality. The point rather is that it is no longer defined such that it needs
to be in trade-off relations with equality, which was the conception of lib-
erty that my dialectic invoking Gandhian considerations of alienation was
devisedtotransform.
If all three notions, liberty, equality, and the unalienated life are trian-
gulated in this way together, we have a notion of unalienatedness that is
not the same as the one of pre-modernity with its absence of liberty and
equality, and we have a notion of liberty that is not itself generative of
inequalities unlike in the liberal framework where it is individualistically
conceived (in the form that attaches to individual talent and property)
but rather non-individualistically conceived in the way that I have just
very briefly outlined.
An Unalienated Way of Thinking
With the centrality given to the ideal of an unalienated life, a crucial thing
that such a revised framework yields is that it is now quite impossible to
even so much as raise the difficulties that lead to the tragedy of the commons.
If what I have just drawn together from Gandhi’s seemingly miscellaneous
strands of philosophical claims are right, to even so much as have the
qualm and raise the question, ‘Would my efforts and contributions to
the collective cultivation (or restraint from over-cultivation) be wasted
if others don’t also contribute?’ is already to be thoroughly alienated,by
the lights I have set up in the ideal of the unalienated life I have just
presented. When the society is unalienated in this sense, it does not occur
70 A. BILGRAMI
to one to question that others may not be like one in seeing the world’s
demands in the requisite way I mentioned above.
Spare me the indulgence of relating an anecdote of an experience with
my father in my pre-teen youth that I have recounted in an early essay
of mine on Gandhi.10 He would sometimes ask that I go for walks with
him in the early morning on the beach near our home in Bombay. One
day while walking we came across a wallet with some rupees sticking out
of it. My father stopped me and said somewhat dramatically, ‘Akeel, why
shouldn’t we take this?’ And I said sheepishly though honestly, ‘I think
we should take it’. He looked irritated and said in response, ‘Why do
you think we should take it?’ And I said, what is surely a classic response,
‘because if we don’t take it, somebody else will’. I expected a denunci-
ation, but his irritation passed and he said: ‘If we don’t take it, nobody
else will’. I thought then that this remark had no logic to it at all. Only
decades later when I was thinking of questions of alienation did I realize
that what he might have had in mind is the assumption of an unalienated
framework of thinking. It is the assumption behind the thought ‘If we
don’t take it, nobody else will’ that expresses that unalienatedness.
I want to stress the relevance here of the remarks I began with in
Gandhi about how alienation is reflected in the detachment or disengage-
ment in our social relations. Because that is so, it becomes clear that the
expression, ‘nobody else will’ in my father’s response cannot be expressive
of unalienatedness if it is interpreted as a prediction of what others will
do. When we predict what others will do we relate to them from a dis-
engaged perspective. That is the perspective that pervades alienated social
relations. In fact it is only when we view others from this perspective that
we are prompted to ask the question that drives the tragedy of the com-
mons, ‘What if I paid the cost of cooperation and others didn’t?’ And
my invoking my father’s remark was precisely to point to something in it
that is quite different from this perspective. From a detached perspective,
what my father said might seem like naïve optimism about what others
will do. But even to raise the question of optimism (or realism) is to view
his remark (‘nobody else will’) as a prediction made from a detached per-
spective on others. That misses the point I am making in invoking it. The
assumption that others will not take the wallet if we don’t is not made
10 Akeel Bilgrami, “Gandhi, the Philosopher,” Economic and Political Weekly, Vol. 38,
No. 39, 27 September 2003.
4 RATIONALITY AND ALIENATION: THEMES FROM GANDHI 71
from that detached point of view. It is an assumption of a quite differ-
ent sort, more in the spirit of ‘let’s see ourselves this way’, an assumption
that is unselfconsciously expressive of our unalienatedness, engaged with
others and the world, rather than assessing the prospects of how they will
behave in a disengaged mode.
To return to the perceptual understanding of our normative responses,
if each commoner in exercising his liberty or self-governance is seeing the
world’s normative demands right, seeing it from the non-individualistic
perspective, a perspective larger than her own, the question that leads
eventually to the tragedy, (‘Should I contribute the costs of cooperation
if others don’t?’) is simply silenced or preempted. Or, to approach it from
the other side and invoke the analogy I gave earlier, to ask that question
is analogous to seeing the road ahead from the point of view of your own
body rather than from the point of view of the car. The tragedy of the
commons is, then, like the tragedy of a car crash, something you land in
when you have an alienated (motor-unworthy) perspective on the world.
And something like the conceptual shift of the kind that radically revises
what is central among our political ideals and places the unalienated life
on centre stage is what allows you to see self-governance and liberty along
these lines which will help preempt the tragedy.
To be unalienated is to be free of a certain malaise, but since that
malaise gets a rather abstract description, to be ‘unalienated’ itself must
be understood in relatively abstract terms. It is not to have sympathy for
or feel fraternity (that is why I did not choose ‘fraternity’ and chose the
‘unalienated life’ as my central ideal) with others or to show solidarity
towards others, good though it is to have and do that—not all good
things are the same good thing! Rather, it is to be free of a way of thought
in which, when we make the decisions we make in governing ourselves
as individuals in the exercise of our liberty, we do not so much find it
wrong as we find it never occurring to us to have the qualm in question
that leads to the tragedy—suggesting that game-theory itself may be a
higher-order symptom of our alienation. And to be free of that way of
thought is simply (well, ‘simply’ is an ostentatious bit of rhetoric here)
the other side of a fitting phenomenology of value. To see the world and
its value properties that make normative demands on us aright and to
overcome alienation are not two things but one.
I have spent a long time in presenting a no doubt unnecessarily elab-
orate set of considerations to establish the case against a liberal politi-
cal and economic point of view (from Locke’s contractualism through to
72 A. BILGRAMI
contemporary defences of it via arguments regarding the tragedy of the
commons) that seeks to establish both the rationality and therefore the
historically progressive necessity of a deeply set privatized form of capital
that Amartya Sen’s remark, with which I began, invokes. One answer to
the updating of Locke by this tragedy of the commons argument for the
rationality of privatization, I have argued, is via a proper understanding
of the centrality of the ideal of unalienated life that is on offer in Gand-
hi’s political philosophy. Such an answer, if right, may have the merit of
showing the entire set of assumptions that are expressed in Sen’s remark
to be uncompulsory.
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Open Access This chapter is licensed under the terms of the Creative Commons
Attribution 4.0 International License (http://creativecommons.org/licenses/
by/4.0/), which permits use, sharing, adaptation, distribution and reproduction
in any medium or format, as long as you give appropriate credit to the original
author(s) and the source, provide a link to the Creative Commons license and
indicate if changes were made.
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chapter’s Creative Commons license, unless indicated otherwise in a credit line
to the material. If material is not included in the chapter’s Creative Commons
license and your intended use is not permitted by statutory regulation or exceeds
the permitted use, you will need to obtain permission directly from the copyright
holder.
CHAPTER 5
Consumerism in Contemporary China
Karl Gerth
Why have the values of consumerism become predominant in the contem-
porary world? This chapter explores the rise of consumerism through the
recent history of China and the spread of its defining value—you are what
you consume—through two related arguments. First, consumerism is
embedded in industrialization itself. Second, consumerism has not spread
spontaneously. The history of China since the Communist Revolution in
1949 suggests that every industrializing state, whether “capitalist” or “so-
cialist,” has played a critical role in spreading consumerist values. Political
economies around the world—even “socialist” ones—have helped spread
consumerism over many decades. Because humans and their institutions—
not “human nature”—create consumerism, the possibility of promoting
non-consumerist values such as egalitarianism, civic mindedness, and spir-
ituality exists. However, the history of consumerism also reveals itself to
be a formidable foe to such alternative values.1
Modern consumerism spread as part of industrialization. Industrial-
ization and consumerism have depended on each other. Observers often
1For providing a forum and critical commentary, the author thanks Tanweer Akram
and the other participants at the conference, “Faith and Finance,” the University of St.
Thomas, Minneapolis (July 25, 2018).
K. Gerth (B)
Department of History, University of California, San Diego, CA, USA
© The Author(s) 2020
T. Akram and S. Rashid (eds.), Faith, Finance, and Economy,
https://doi.org/10.1007/978- 3-030-38784-6_5
75
76 K. GERTH
overlook this dependence. Modern history usually focuses on the pro-
duction side of this relationship: how people used new technologies and
fossil fuels to improve productivity and expand production, that is, how
countries industrialized. Studying consumerism shifts the traditional focus
from production to consumption, from the supply side to the demand
side of industrialization. Endless demand for mass-produced things has
been assumed by historians who have focused on industrialization as a
story of overcoming the limits of production with fossil fuels and new
technologies. But a simultaneous expansion of demand alongside pro-
duction had to occur. Industrial capitalism needed people (reconceptual-
ized as “consumers”) to want newer and more products. The history of
consumerism explores the challenge of getting people to value learning
about and attempting to acquire ever-more things.2To give one exam-
ple, modern advertising became “modern” because it relied heavily on
images and implied stories rather than text and information.3Advertising
informed “consumers” not simply that a given product existed and had
various specific uses but rather that acquisition of a product allowed one
to construct and communicate an identity through its consumption. Con-
sumerism valued the use of things rather than, say, actions or relationships
to tell the world (and oneself) who one is.
Supporters of consumerist values emphasize how the consumption of
things enables self-expression and empowerment, what scholars refer to as
“agency.” To invoke a famous US advertising slogan, one could “be like
Mike” (basketball star Michael Jordan) if they chose to buy a brand of
sugary colored water (Gatorade) or, to cite another popular commercial
trope, if a male drank a certain brand of beer he would be more attractive
to the opposite sex. The power of consumerism has been its ability to
make multiple identities possible through consumption, even those asso-
ciated with anti-consumerism, such as environmentalism. One could, for
instance, choose to communicate “I am an environmentalist” not just by
2On the long-term, global rise of consumerism, see the edited volumes and work of
Frank Trentmann, particularly his wide-ranging study (2017) Empire of Things: How We
Became a World of Consumers, from the Fifteenth Century to the Twenty-First. London:
Penguin Books.
3This interpretation of the role of modern advertising comes from Sut Jhally. 2016.
Codes of Advertising: Fetishism and the Political Economy of Meaning in the Consumer
Society. New York: St. Martin’s Press.
5 CONSUMERISM IN CONTEMPORARY CHINA 77
hugging a tree but by driving a hybrid Prius rather than a gas-guzzling
Hummer.
Critics contend that consumerism creates a narcissistic culture.4Rather
than personal empowerment, consumerism undermines self-confidence
and self-worth by teaching people to focus on a never-ending list of per-
sonal faults that, once recognized, must be corrected through informed
consumption.5Expressing values becomes an exercise not done through
social deeds aimed at improving the collective good but rather by fulfill-
ing individual needs and desires through commodified things and expe-
riences. Everything shifts toward values mediated by consumerism across
all areas of life, including areas seemingly antithetical to consumerism. As
the CEO of one religiously affiliated financial company observed, people
are taught to interact with their churches not as members of a commu-
nity but rather as “consumers.” They then begin to fix the problems of
their church not as co-members of a community but rather by finding a
more suitable church, that is, by choosing a different product.6The secu-
lar world of politics has seen similar transformations under consumerism.
Rather than seeing politics through the lens of citizens who set the entire
political agenda, residents of “democratic” countries have become con-
sumers who select a political product. To add a third example of the
ubiquity of consumerist values, college professors complain of the same:
students see themselves as consumers who do the choosing rather than
students to be educated.
While consumerism predates the industrial era that led to mass pro-
duction, modern consumerism spread quickly starting in the late nine-
teenth century.7Industrial production meant producers had to find new
4The classic expression of this interpretation comes from historian Christopher Lasch.
2018. Culture of Narcissism: American Life in an Age of Diminishing Expectations.New
York: Warner Books.
5For a brief and accessible introduction to examples of sexist stereotypes used both
to teach “faults” such as grey hair or skin blemishes and sell products for women to fix
them, see http://www.dailymail.co.uk/femail/article-5463181/Vintage-ads-reveal-sexist-
campaign-slogans.html. Accessed 8 August 2018.
6Brad Hewitt and James Moline. 2015. Your New Money Mindset: Create a Healthy
Relationship with Money. iBook, no pagination. They write: “People show up less as
worshipers or community members than as consumers. As soon as an engaging preacher
leaves or a great musician moves on, the church down the road suddenly looks a lot
better. That’s a consumer mindset….”.
7For an overview of the pre-modern histor y of consumerism, see John Brewer and Roy
Porter, eds. 1994. Consumption and the World of Goods. New York: Routledge. On the
78 K. GERTH
ways to stimulate desire. State power in the form of imperial expansion
help spread consumerism abroad by “opening” new markets. Imperial-
ist powers taught inhabitants their countries were comparatively “back-
wards” and needed to “catch up.” Overt military force as well as the sub-
tler means associated with the introduction of mass-produced products
taught this lesson of backwardness. Once they gained market access, for-
eign companies convinced populations to have new material needs and
wants. Billions of dollars of advertising, for instance, flowed into new
forms of mass media such as newspapers and radio.8By the early twenti-
eth century, advertising had shifted from focusing on the specific uses of
a product (e.g., buy a bicycle to get to work) to the identities one could
create and communicate to others through possessing things (e.g., possess
a bicycle to communicate class, masculinity, and other attributes).9
The People’s Republic of China (PRC) provides a good place to
explore the history of the universal phenomenon of consumerism. The
tension between consumerism and non-materialistic values is highly vis-
ible in contemporary China because the country started to industrialize
relatively late and because since 1949, after the Communist Revolution,
it claimed to be industrializing without “bourgeois” consumerism, as a
country that was “building socialism.” The rush to “catch up” with the
dominant global powers led to both positive and negative outcomes.
The positive side is well known: a record of leading hundreds of mil-
lions out of extreme poverty. But the explosive growth in the PRC also
included a consumerism that created or exacerbated innumerable urgent
crises: childhood obesity, extreme markets for body parts and endangered
species, acid rain falling on 1/3 of the country, and many other human
Chinese antecedents, see Craig Clunas. 1991. Superfluous Things: Material Culture and
Social Status in Early Modern China. Champaign: University of Illinois Press.
8For general coverage of the spread of advertising, see Mark Tungate. 2013. Adland:
A Global History of Advertising, Ed. 2. Philadelphia: Kogan Page. For a good example
of how new technologies spread awareness and desire for products via advertising, see
Steve Craig. 2009. Out of the Dark: A History of Radio and Rural America. Tuscaloosa:
University of Alabama Press.
9For an account of one global company in China and the marketing techniques it
introduced to cultivate desires, see Sherman Cochran. 1980. Big Business in China: Sino-
Foreign Rivalry in the Cigarette Industry, 1890 –1930. Cambridge: Harvard University
Press.
5 CONSUMERISM IN CONTEMPORARY CHINA 79
and environmental catastrophes.10 The PRC provides particularly striking
evidence of how consumerism dominates the contemporary world.
The history of consumerism in the PRC also reveals consumerism as
a formidable foe embedded in all industrial societies. Since the rise of
modern consumerism in the late nineteenth century, nations and indi-
viduals have learned to compete through consumption. The compul-
sion to compete through consumption was part of the global political
economy in both “socialist” and “capitalist” countries during the Cold
War. Consumerism developed even during the time when Chairman Mao
Zedong was the preeminent leader, from the establishment of the PRC
in 1949 to his death in 1976 (hereafter, the Mao era). This chapter dis-
cusses the compulsion to adopt the values of consumerism and compete
through consumption, including at the height of the Mao era, and the
Chinese Communist Party’s (CCP) efforts to create an alternative “so-
cialist” culture. The reinterpretation of the Mao era as promoting rather
than quelling consumerism contextualizes the last part of the chapter, an
examination of how this state-led consumerism of the Mao era continued
into the early 1980s, when the CCP shifted dramatically from attempt-
ing to suppress consumerism to promoting both private enterprise and
“bourgeois” consumerism.
The Compulsion to Consume
The recent history of PRC reveals the power of consumerism to displace
other values. After the Communist Revolution of 1949, CCP leaders
claimed they were building a radical “New China”, with a “New Soci-
ety”, which fundamentally broke with both the pre-1949 “Old Society”
as well as global capitalism.11 The critical turning point was the victory of
the CCP and the “liberation” of China in 1949. In official histories, the
10 I cover the negative consequences of the post-1978 promotion of consumerism in
Karl Gerth. 2013. As China Goes, So Goes the World: How Chinese Consumers Are Trans-
forming Everything, Chapter 7. New York: Farrar, Straus and Giroux. Many other books
detail individual crises. On the obesity epidemic that has accompanied expanding con-
sumerism, see Paul French and Matthew Crabbe. 2010. Fat China: How Expanding
Waistlines Are Changing a Nation. London: Anthem Press.
11 Michael Schoenhals. 1992. Doing Things with Words in Chinese Politics: Five Stud-
ies. Berkeley: Institute of East Asian Studies, Center for Chinese Studies, University of
California.
80 K. GERTH
Communist Revolutionaries “liberated” China from the domestic (“semi-
feudal”) and international capitalist (“semi-colonial”) forces that enslaved
the country and kept China poor and weak. Consequently, the Socialist
Revolution was not merely a violent power struggle between two con-
tending political parties—the Nationalist Party (KMT) under Chiang Kai-
shek versus the CCP led by Mao Zedong. According to the revolution-
aries themselves, the civil war was a conflict over two fundamentally dif-
ferent visions of how to transform China into a wealthy and powerful
country: capitalism vs. socialism.
The idea that the PRC was building an anti-capitalist, anti-consumerist
nation served both sides in the Cold War and still predominates in popular
interpretations. Even academics and popular histories outside of the PRC
conventionally echo the CCP language by framing the history around the
embrace of socialism in 1949 and its transformation in 1978.12 Global
populations learned to see China through the frame of socialism. Adver-
saries of the PRC and CCP abroad, led by the United States, reinforced
the idea that 1949 was a revolutionary socialist (or “communist”) break
with the capitalist countries. Throughout the Cold War (and in some cases
down to the present), politicians, scholars, and the mass media—in China
and its adversaries—cast their differences as differences between antitheti-
cal world orders.13 “Communism” versus “capitalism” became the terms
both sides used not only to describe their opposition but also themselves.
Depicting the tensions between Cold War adversaries as battles between
two completely different ways of life was as crucial for domestic cohesion
and discipline as for the battle for the hearts and minds of the opposing
populations.14
12 Scholarly accounts almost universally emphasize these breaks. The same applies to
college courses, which mostly begin in 1949 or end in 1978. There are a growing number
of exceptions that question CCP formulations. See, for instance, Frederick Teiwes and
Warren Sun. 2015. Paradoxes of Post-Mao Rural Reform: Initial Steps Toward a New
Chinese Countryside, 1976 –1981. New York: Routledge.
13 For an illustration of these contrasting ways of life in the popular (US) imagination
during the height of the Cold War, see the Armed Forces Information Film “Freedom and
You,” rereleased in 1962 as “Red Nightmare,” which presents as an educational film of
what American life in a small town would have been like under “communism.” https://
www.youtube.com/watch?v=cgR4apcz_Ew. Accessed 21 July 2018.
14 This theme is discussed in Oscar Sanchez-Sibony. 2014. Red Globalization: The Polit-
ical Economy of the Soviet Cold War from Stalin to Khrushchev. Cambridge: Cambridge
University Press, 9 n. 6 and throughout.
5 CONSUMERISM IN CONTEMPORARY CHINA 81
Yet, even after the CCP came to power in 1949, decades of mass cam-
paigns and state rhetoric vilifying “bourgeois” consumer desire as a threat
to “socialist construction” not only failed to destroy consumerism but
even helped spread it into new classes and places. Consumerism spread
because all industrializing countries competed with each other and within
themselves over both big and everyday technologies. Competition over
the more capital-intensive “big technologies” was more conspicuous in
the form of railroads, telegraphs, mining, large-scale irrigation, electrifica-
tion, and, most importantly, national “defense” technology. Such compe-
tition between nations easily appears as vanity. In the twentieth century,
big technologies became icons of national wealth and power.15 Having
better technology (such as an atom bomb) became a measure of national
success that conferred political legitimacy. Nations competed over big
technologies as conspicuous measures of their success overcoming earlier
“backwardness.”
National wealth—and political power—depended on successful compe-
tition. Without big technologies the CCP could not compete against the
British, Japanese, Americans, and smaller imperialist powers for both the
latest and most necessary forms of national security and economic infras-
tructure. An atom bomb, which the PRC first exploded in 1964, became
the clearest manifestation of competition over big technologies.16 With-
out an atom bomb and other big technologies, particularly weapons, the
PRC would have faced even greater threats of military invasion. In effect,
competition was compulsory. Likewise, without secure borders, imperial-
ist powers would have continued to dominate the economy, as they had
in the first half of the twentieth century. Big technologies were critical
to specific forms of economic competition. They increased productiv-
ity and lowered transaction costs. New railroads, for instance, enabled
PRC economic planners to move northwest coal to southeast factories,
thereby making the latter more productive. Before and after the estab-
lishment of the PRC in 1949, Chinese leaders knew the country had to
15 The best-known book on this topic is: Michael Adas. 2015. Machines as the Measure
of Men Science, Technology, and Ideologies of Western Dominance. Ithaca: Cornell University
Press. On competition over big technology in China specifically, see Anne Reinhardt.
2018. Navigating Semi-Colonialism: Shipping, Sovereignty, and Nation-Building in China,
1860–1937. Cambridge: Har vard University Press.
16 Joseph Cirincione. 2007. Bomb Scare: The History and Future of Nuclear Weapons.
New York: Columbia University Press, 51.
82 K. GERTH
compete to create or acquire big technologies. Without those continual
improvements, the PRC could not compete for markets and earn the cap-
ital needed for big technologies.
While military and economic rivals created a national compulsion to
compete in big technologies, there was simultaneous competition over
new “everyday technologies” that helped drive consumerism. These were
less conspicuous and capital-intensive than big technologies, and included
sewing machines, bicycles, timepieces, typewriters, radios, gramophones,
cameras, rice mills, and a host of others.17 Mass-produced everyday tech-
nologies transformed all aspects of day-to-day life. In the process, they
also helped introduce the idea of backwardness and, thereby, the compul-
sion to “catch up.” Even without modern advertising designed to teach
people about their inadequacies, the spread of these everyday technolo-
gies popularized a notion of individual backwardness that could only be
overcome with the acquisition and mastery of mass-produced products,
things one had to buy. The consequences of failing to acquire and master
everyday technologies powerfully shaped identities and thereby increased
the desire to possess things. The pride of knowing how to ride a bicy-
cle or operate a sewing machine, particularly when few did, also provided
a person or family with material advantages. Likewise, competition over
knowledge and possession of everyday technologies recreated many of the
inequalities the CCP claimed to correct: urban over rural; mental over
manual; coastal over interior (and, later, male over female). Conversely,
the lack of knowledge—much less possession—of everyday technologies
generated shame that one had not mastered everyday technologies.
The national and individual compulsion to compete by possessing
big and everyday technologies meant the stakes related to consumerism
were—and remain—great. Since the start of industrialization in China in
the late nineteenth century, high stakes have continually justified a much
greater state role in managing consumption and consumerism, a realm
of activity often thought to be about personal choice. In the realm of
politics, “catching up” and overcoming relative backwardness has been a
fight that helps justify CCP monopoly control over the state and, indeed,
the necessity of a “socialist” country having a strong state. As with other
countries struggling to overcome relative backwardness, the CCP has long
17 The expression “everyday technologies” comes from David Arnold. 2013. Ever yday
Technology: Machines and the Making of India’s Modernity. Chicago: The University of
Chicago Press.
5 CONSUMERISM IN CONTEMPORARY CHINA 83
considered as too risky the idea of letting the markets—free of state inter-
vention—decide national and individual priorities. What if the market
catered to the needs of the very wealthiest for, say, bigger yachts rather
than national needs for domestically produced technology such as, figu-
ratively speaking, an atom bomb? And, more recently, what if domestic
consumers preferred a foreign-controlled social media website to a Chi-
nese one?
While the state has been critical to shaping consumerism, the gen-
eral population helped spread consumerism by turning what had been
unimaginable luxuries in the decades before 1949 into everyday products.
The three most highly sought-after products of the Mao era demonstrate
the role of mass production in spreading consumer values in a “socialist”
country. Beyond the basic necessities, people in cities, towns, and villages
around the country most commonly desired what became known as the
Three Big-Ticket Items (san da jian, hereafter, the Big Three). The exact
Three varied by time and place but most often included a wristwatch, a
bicycle, and a sewing machine.18 Throughout the 1940s, all three were
hard to acquire, usually manufactured by foreign-owned companies or
imported, and only found in the homes of the better-off. As the domestic
industry recovered from decades of war in the 1950s, for most people,
even having any one of the three was an accomplishment. However, the
trend over the course of the Mao era led to near-universal awareness,
desire, or possession of the Big Three. CCP policies spread consumerism
by making the Big Three increasingly available to people in cities, towns,
and even parts of the countryside. By the end of the era, they had gone
from being comparative luxuries to being so commonplace that the orig-
inal Big Three were no longer considered extravagances. Consumerism
continually expanded—alongside production—in the form of new desires.
The Big Three of the 1980s became some combination of TVs, washing
machines, electric fans, and portable cassette players. By the 1990s, peo-
ple desired stereos, mobile phones, microwave ovens, refrigerators, and
personal computers. And now the upwardly mobile dream of cars, apart-
ments, leisure travel, and other more expensive things. And, of course,
18 Although those starting a new household often considered a sewing machine one of
the essential Big Three items, some young people preferred a radio or a camera. Wool
clothing was also sometimes described as one of the Big Three, especially as part of a
betrothal gift.
84 K. GERTH
the growing consumption of these consumer goods have become a cru-
cial aspect not only of consumerism but also new rounds of economic
growth in China.19
Consumerism—the desire to communicate identity through the con-
sumption or use of things—spread at the level of ordinary life thanks to
the immediate practical uses as well as the broader social value of the
Big Three. Demand grew because industrialization made the Big Three
increasingly indispensable as labor-saving technologies, modes of trans-
portation, and labor multipliers (i.e., the same amount of labor produced
more products).20 The desire for watches, for instance, reflected the new
discipline over time, particularly those working on highly time-dependent
“factory time” rather than by the sunlight in agricultural fields. Individ-
ual ownership by factory workers, for instance, meant they could not only
show up on time for work but also resist manipulation of a central clock
by their employers.21 Likewise, bicycles symbolized the need for greater
mobility, for instance, to get to a job or to transport agricultural prod-
ucts to markets. And sewing machines created opportunities to increase
female productivity through sideline work. The broader social uses of the
Big Three multiplied so fast and became so important for everyday life
that acquisition and mastery became, in effect, increasingly compulsory.
Everyday life pushed people to desire the Big Three for social uses such
as bribes to officials, ways to store value after a good harvest, and even
as enticements offered by parents to get their children to study harder
for school entrance exams. Even toothbrushes and toothpaste taught new
ideas of the body and hygiene: teeth required regular brushing—as well
as class and urbanity—and those who did not know to brush their teeth,
19 On the state role in promoting cars, including electric vehicles, see Karl Gerth.
2015. “Driven to Change: The Chinese State-Led Development of a Car Culture and
Economy,” in Atle Middledun and Nina Witoszek (eds.), Energy Transport in Green
Transition: Perspectives on Ecomodernity. New York: Routledge.
20 On farmers hoarding the Big Three, such as one that bought ten bicycles, see Ren
Yuanhang, “Shucai diqi bufen nongmin zizhang langfei xianxiang” (The Phenomenon of
Vegetable Farmers Overspending), Hangzhou Daily, 25 July 1957; and “Qian yao yong zai
daokou shang” (Money Ought to Be Spent on the Blade), Hangzhou Daily, 22 August
1957. On bribing children with watches, see Guang Jun, “Hang Liu Zhong zhaokai
jiazhang hui” (A Parents’ Meeting in Hangzhou No. 6 Middle School), Hangzhou Daily,
27 March 1957.
21 E. P. Thompson. 1967. “Time, Work-Discipline, and Industrial Capitalism.” Past &
Present 38: 56–97.
5 CONSUMERISM IN CONTEMPORARY CHINA 85
much less actually brush them, were “backward.”22 Products enabled and
created the social need to communicate something as taken-for-granted
as “I know how to ride a bicycle” or “my family is prosperous and con-
nected enough to acquire a sewing machine.” Products and their social
environments overrode “socialist” attempts to suppress consumer desire.
Perhaps the most important function of the Big Three came with every
family wanting to marry off its young men to suitable women. Despite
endless admonitions to keep weddings simple, throughout the Mao era
and since, a bride’s family expected even modestly well-off young men’s
families to provide at least one and ideally all Big Three at the time of
betrothal. Failure to do so suggested that the groom was an undesirable
match. This expectation—embodied in the concepts of “perfect match
based on comparable standing” and “face” transcended the Socialist Rev-
olution of 1949 and was so deep-seated in cities and villages that in some
cases, the groom’s family would borrow money to obtain the necessary
items and pay off the debt after the marriage. The continued desire for
specific products to assess and reinforce social differences underscores the
impossibility of creating a “socialist” culture with values built entirely
around self-sacrifice and austere “proletarian” uniformity egalitarianism.23
And competition was never-ending. In addition to the inflation of
desires noted above, hierarchies based around brands further expanded
consumerism. As industrialization and consumerism developed, not
everyone was satisfied once they possessed one item or even a generic
item in that category. One might want not just any wristwatch but only
aShanghai brand wristwatch or even the latest model, lest they feel
ashamed by a dated or inferior model. In the eyes of some upwardly
mobile Lower Yangzi delta residents, for instance, at one point, the height
22 For an accessible overview of bodily practices such as brushing one’s teeth that
emerge in the late nineteenth century, see Ruth Goodman. 2015. How to Be a Victorian:
A Dawn-to-Dusk Guide to Victorian Life. London: Viking. Henrietta Harrison covers
some these topics for China in (2011) China: Inventing the Nation. New York: Oxford
University Press.
23 On the frustrations of rural cadres attempting to eradicate betrothal gifts in the
first decade of the PRC, see Neil Jeffrey Diamant. 2000. Revolutionizing the Family:
Politics, Love, and Divorce in Urban and Rural China, 1949–1968. Berkeley: University
of California Press.
86 K. GERTH
of fashion was for a young person to ride a Forever bicycle, wear a Shang-
hai brand watch, and listen to a Red Lantern radio.24 “Socialist” coun-
tries such as China also witnessed the development of consumerism to
include communication through branded products.
Of course, the proliferation of products did not spread uniformly. Con-
sequently, the centrality of the values introduced by consumerism varied
by place and time. A factory manager in Shanghai—where there were
at least ninety well-known product brands by the end of the Mao era—
would have had different experiences than a rural farmer. This factory
manager, for instance, would have had greater knowledge of and desire
for an Enicar imported Swiss watch than, say, a farmer in rural Guangxi
province.25 While the manager would have had a greater need to partic-
ipate directly in consumerism, many millions did not engage in much
consumption, much less “consumerism.” It is easy to imagine villages
throughout China that during this period had little to do with com-
municating identity through buying things. The country was, after all,
starting from a position of extreme poverty. Few rural residents—and not
that many urban ones—dreamed of Enicar watches. Nevertheless, posses-
sion—or lack thereof—alone introduced new social cleavages in a country
claiming to be building a more egalitarian country.
New forms of social differentiation based on knowledge about and
desire for products spread faster and further than their acquisition. Count-
less tens of millions of urban and rural households across China—and in
increasing numbers—began to learn about, desire, and even feel com-
pelled to want and use everyday technologies. Even a very poor person
with little chance of acquiring a bicycle or sewing machine might have
seen the Big Three on street advertisements, witnessed them in a state-
made movie projected by a traveling film team visiting their isolated vil-
lage, been told they were mandatory to secure a bride, or encountered
them in countless other ways. Awareness and desire predated possession.
24 Huang Ji Zahuo Pu (blog name), “Zhongguo shoubiao wangshi” (The History
of Chinese Watches), 20 June 2009. http://blog.sina.com.cn/s/blog_609daf0f0100eeft.
html. Consulted 8 July 2017.
25 Zhu Zhanliang. 1981. “Shanghai qinggongye mingpai chanpin chutan” (A Brief
Analysis of Famous Brands Produced by Shanghai Light Industry). Shanghai jingji yanjiu
9(9): 7–11.
5 CONSUMERISM IN CONTEMPORARY CHINA 87
The Limits of State Consumerism
Attempts by industrializing countries such as the PRC to define alterna-
tive values to consumerism such as socialist egalitarianism failed. Con-
sumerism was more powerful than state efforts to limit or control it. Still,
the CCP tried to manage consumerism not only because it posed a threat
to its stated “socialist” values but also because consumer desire threat-
ened the CCP’s economic development strategy. Since 1949, the CCP
has followed the example of other “late-comer” industrializing countries
and attempted to accelerate industrialization by managing both the pro-
duction side and the consumption side of the economy. In the view of
the CCP, the need to industrialize and “catch up” as quickly as possible
meant individual consumer choices were too important to national wealth
and power to be left in the hands of impressionable, uneducated, or even
unpatriotic individual “consumers.”
While the CCP’s role in organizing mass production is well-known,
less known is its related role in managing demand. In this chapter, the
term “state consumerism” represents the wide-ranging efforts within the
PRC to eliminate, discredit, or at the very least marginalize what the CCP
depicted as a chief threat to its control over how to spend, or allocate,
its resources. The CCP attacked as “bourgeois consumerism” many of
those challenges to state control over allocations, particularly those allo-
cations that reinforced and communicated “capitalist” values of inequal-
ity, individualism, and exploitation through the desire for and acquisi-
tion of products and services. By contrast, state consumerism involved
efforts led by the CCP to suppress or channel consumer desire, includ-
ing by promoting a distinctive “socialist” consumerism and condemna-
tion of “bourgeois” and “feudal” consumerism. In the Mao era, state
consumerist policies to enforce these values included eliminating imports
of “bourgeois” goods such as British Raleigh bicycles, Japanese Seiko
watches, and American Singer sewing machines and limiting the amount
and placement of advertising that might otherwise stoke undesirable con-
sumer desire.26 The CCP also used its monopoly control over the mass
media to equate an ethos of “hard-work and frugal living” (jianku pusu)
with “socialism.” Put more concretely, unbridled desire for, say, imported
26 Edward J. M. Rhoads. 2012. “Cycles of Cathay: A History of the Bicycle in China.”
Transfers 2(2) (Summer), 95–120.
88 K. GERTH
watches—whether fulfilled at a state-run store or on the black market—
meant less capital for the state to allocate on national priorities such as the
figurative atom bomb. Similarly, too much desire even for China-made
watches created pressure of the state to allocate more scarce resources
into consumer goods rather than producer goods.
The CCP goals of controlling production and consumption perme-
ated Chinese society. Manifestations of a state-controlled economy “com-
manded” to be productive appeared everywhere, from Five-Year Plans
to backyard steel furnaces to the mass mobilization of millions to turn
barren land into cultivatable land or build bridges and tunnels. This pre-
occupation with developing the forces of production—capital accumula-
tion—also permeated all aspects of everyday life and undoubtedly made it
easier to overlook the spread of consumerism. Movies and literature lion-
ized model workers such as Hao Jianxiu, a textile worker who invented
methods to improve productivity and reduce waste; model farmers such
as Wang Guofan, who figured out ways to increase harvests; and model
soldiers such as Lei Feng, whose diary recorded his tireless efforts to serve
the nation and do so voluntarily, without remuneration.27 Alongside “fru-
gality,” the CCP wanted people in the “people’s republic” to work for
free.
State consumerism was contentious. States often sought to impose lim-
its on individual choice, a central pillar of consumerism, in the name of a
higher ideology emphasizing collective goals such as “socialism” or “na-
tionalism.” Again, such attempts were not unique to China or even “so-
cialist” countries and spread across the globe through national mass cam-
paigns urging “patriots” to abstain from imports and buy products now
cast as “domestic,” “home,” “native” or “national” products.28 In China,
27 Lily Xiao Hong Lee, ed. 1998. Biographical Dictionary of Chinese Women. Armonk:
M. E. Sharpe, 198–200; Jack Grey. 1973. Mao Tse-tung. Cambridge: Lutterworth Press,
46–47; and Miin-ling Yu. 2010. “‘Labor Is Glorious’: Model Laborers in the People’s
Republic of China,” in Thomas P. Bernstein and Hua-Yu Li (eds.), China Learns from
the Soviet Union, 1949–Present. Lanham: Lexington Books.
28 Because all industrializing states attempted to manage consumption, the secondary
literature is vast. The swadeshi (“belonging to one’s own country”) and non-cooperation
movements in India (1904–1908, 1920–1922) are the best-known and best-studied exam-
ples of such an application of nationality to products. Historians of late-colonial America
have also emphasized the early links between consumerism and nationalism. For example,
see Arthur M. Schlesinger. 1957 [1918]. The Colonial Merchants and the American Revo-
lution, 1763–1776. New York: Frederick Ungar; and Timothy H. Breen. 2010. American
Insurgents, American Patriots: The Revolution of the People. New York: Hill and Wang.
5 CONSUMERISM IN CONTEMPORARY CHINA 89
before 1949, popular and state demands that individuals prioritize “na-
tional interests” over market prices, personal preferences, or other con-
siderations were a tough sell. This is hardly surprising. Individuals often
ignored or were ignorant of such demands. There was little the state,
manufacturers of “Chinese products,” or enthusiastic supporters of this
form of nationalism could do to enforce a “patriotic” interpretation of
consumer culture by ensuring Chinese people bought “Chinese prod-
ucts.”29
However, after 1949, the CCP finally had the power to impose the
more autarkic economic vision developed in earlier decades, to add much
more “state” to state consumerism. Rather than simply hoping popu-
lar campaigns might determine “patriotic” preferences, the CCP could
now also impose nationalistic consumption with the same macroeco-
nomic tools used in various market capitalist economies—tariffs on trade,
exchange controls on hard currency, and outright bans on imports.
Despite the official hostility toward things such as American nylon stock-
ings or Hollywood films, and the difficulty of finding them, consumers
actually still favored such imports over domestic goods and sought them
out in the name of comfort, fashion, or other personal reasons. But con-
sumers in late-industrializing countries such as China often preferred less
expensive, higher-quality, heavily advertised imports, a consumer prefer-
ence directly at odds with state goals to exercise more control over capital
allocations and develop domestic industry.
Ultimately, individual consumerist desires generated in industrial soci-
ety proved impossible to dictate. Attempts to replace “bourgeois” con-
sumerism with state control were more aspirational than actual. The
CCP’s inability to control demand is predictable. After 1949, workers
took the victorious CCP at its word that the Revolution inaugurated “the
dictatorship of the proletariat.” Contestations arose between the CCP,
which wanted to allocate the surplus for collective “national needs,” and
workers and farmers, who usually had their own priorities. Workers and
Such “Buy American” campaigns are so numerous in American history that there is a
survey of such attempts across the entire history of the US. See Dana Frank. 1999.
Buy American: The Untold Story of Economic Nationalism. Boston: Beacon Press; and
Lawrence B. Glickman. 2009. Buying Power: A History of Consumer Activism in America.
Chicago: The University of Chicago Press.
29 On China’s attempts to link consumption and nationalism, see Karl Gerth. 2003.
China Made: Consumer Culture and the Creation of the Nation. Cambridge: Harvard
University Press.
90 K. GERTH
farmers fought for greater control, both directly by demanding higher pay
and indirectly by pilfering the fruits of their labor. Farmers wanted to keep
more of the harvest; workers wanted higher pay to buy more food, better
housing, and various consumer goods.30 Thus, immediate crackdowns on
labor strikes and institutionalization of long-term forms of control such
as state-run labor unions were actually attempts to suppress competing
demands over the surplus and its allocation into more consumption.
Even CCP leaders remained ambivalent about consumerism. The con-
sumerism of the pre-1949 era was rarely completely vilified or discredited.
In China and throughout the Communist Bloc, earlier forms of con-
sumerism persisted in ways such as branded products and the identities
associated with them, often despite explicit state attempts to end or limit
them and, surprisingly, sometimes with state support. Recent research on
Eastern Europe and the Soviet Union has uncovered consumerism thriv-
ing behind the Cold War propaganda that has often obscured such aspects
of everyday life in Socialist economies.31 In line with such scholarship, an
examination of not only the persistence of but also the further spread of
consumerism in the PRC challenges the still pervasive assumption that the
country was a realm of pure asceticism, without room for any consumer
desire. Indeed, this assumption of “socialist asceticism” has led scholars
to write off black market and other “capitalist” activity as unexpected and
exceptional.32
Mao Zedong and many Communist leaders were often openly hos-
tile toward the consumerism associated with urban, “bourgeois” lifestyles.
30 Most recent studies on urban and agricultural work now emphasize contestation
between workers and the state. See, for instance, Elizabeth Perry and Li Xun. 1997.
Proletarian Power: Shanghai in the Cultural Revolution. Boulder: Westview Press.
31 There is a burgeoning literature on the tensions created by consumerism within “so-
cialist” countries, particularly in the German Democratic Republic. Helpful studies include
the relevant chapters on East German advertising in Pamela E. Swett, S. Jonathan Wiesen,
and Jonathan R. Zatlin, eds. 2007. Selling Modernity: Advertising in Twentieth-Century
Germany. Durham: Duke University Press, especially the chapters by Anne Kaminsky and
Greg Castillo. For an overview on the role of consumer politics in the (de-)legitimization
of Communist Party rule in Eastern European states, especially as these states failed to
keep up with the market capitalist Joneses in Western Europe, see Mark Pittaway. 2004.
Eastern Europe, 1939–2000. London: Hodder Arnold.
32 This emphasis on the asceticism of the Mao era is common in popular accounts. See
for instance, Frank Dik¨otter. 2017. The Cultural Revolution: A People’s History, 1962–
1976. New York: Bloomsbury Press.
5 CONSUMERISM IN CONTEMPORARY CHINA 91
But from its first decades forward, the People’s Republic reshaped con-
sumerism in Chinese life, especially in charged political times when even
more common commodities were labeled “bourgeois”—but never elim-
inated it. China continued to mass-produce branded goods, and com-
modities remained objects of everyday discussion as well as markers of
personal and collective identities. It was relatively easy for the state to
suppress supply and limit economic incentives (such as higher pay) in
state-controlled industry, commerce, and agriculture but much harder
for it to control desires. The state could (and did) elect not to manu-
facture enough bicycles, sewing machines, wristwatches and other con-
sumer goods to meet desire. But it could not prevent people from learn-
ing about and desiring these things. And unfulfilled desire had conse-
quences, including the inability of the state to control the economy. By
the late 1970s, the CCP decided it needed to harness market capitalism
and “bourgeois” consumerism for its own political and economic ends.
Leaders such as Deng Xiaoping decided that the PRC could industrialize
faster by stimulating markets and consumerism than by suppressing them.
Official Embrace of Markets and Materialism
Even after the end of the Mao era and the official sanctioning of mar-
kets and consumerism starting in the late 1970s, the state continued
to play a critical role in spreading consumerism. Consumerism did not
develop after the Mao era as a natural phenomenon that occurs any-
time a state withdraws from interfering in the economy. Rather the CCP
implemented specific policies that shifted the organization of production
(work) and consumption (leisure) in ways that promoted consumerism.
Above all, private enterprise led to more consumerism. And vice versa:
more consumerism led tens of millions to seek non-state opportunities to
make money to buy the things they needed for immediate uses as well as
broader social uses.
In 1978, the CCP led by Deng Xiaoping officially sanctioned a major
transformation of society as well as the PRC’s relations with market cap-
italist countries, known as the “market reforms and opening” or sim-
ply “the reform era.”33 Leaders once again permitted small private plots
33 Many works discuss the economic dimension of these policies, including Joseph Few-
smith. 1994. Dilemmas of Reform in China: Political Conflict and Economic Debate.
92 K. GERTH
for agricultural production and small-scale private enterprises.34 Millions
of farmers began to have much more disposable income to buy the
Three Bigs and fulfill new desires. Likewise, millions of “self-employed,
household-run businesses,” known as getihu, popped up following the
policy changes at the top. Entrepreneurs established everything from
dumpling stalls to interprovincial agricultural produce transport. Like
their counterparts in farming, getihu suddenly had disposable income.
Mom-and-pop shop proprietors changed China in their capacity as highly
touted leading consumers in the mass media and popular imagination.
Getihu became the figurative Joneses that other Chinese wanted to catch
up with. Although the vast majority of getihu remained poor, their desires,
and the unintended consequences of their struggles to fulfill those desires,
transformed China in the 1980s.
Beginning in the 1970s, millions of new getihu became a primary force
spreading consumerism.35 Statistics confirm the spread. In 1978, there
were only 150,000 private businesses; a decade later, there were more
than 14 million getihu.36 These numbers grew so fast in part because
legalization of getihu effectively recognized—and attempted to regulate—
private economic activity that was already occurring.37 In contrast to the
Mao era rhetoric of “socialist equality,” in which displays of wealth were at
times deemed crimes against the state or, at the very least, an indication
of “thought problems,” this accelerating privatization of the economy
symbolized by the spread of getihu immediately produced new classes of
Armonk: M. E. Sharpe; Barry Naughton. 1995. Growing Out of the Plan: Chinese Eco-
nomic Reform, 1978–1993. Cambridge: Cambridge University Press; and Carl Riskin.
1987. China’s Political Economy: The Quest for Development Since 1949. Oxford: Oxford
University Press.
34 On local restoration of private plots without state authorization, see Kate Xiao Zhou.
1996. How the Farmers Changed China: Power of the People. Boulder: Westview Press.
35 Susan McEwen. 1994. “New Kids on the Block.” China Business Review 21(3) (May–
June): 35–39. On the consumption side of getihu activity, the sociologist Thomas Gold
has written several articles on getihu based on personal observation. See, for instance,
Thomas B. Gold. (1991). “Urban Private Business and China’s Reforms,” in Richard
Baum (ed.), Reform and Reaction in Post-Mao China: The Road to Tiananmen.New
York: Routledge, 84–103.
36 Susan Young. 1995. Private Business and Economic Reform in China. New York:
Routledge, 6.
37 Ole Bruun. 1991. Business and Bureaucracy in a Chinese City: An Ethnography of
Private Business Households in Contemporary China. Berkeley: Institute of East Asian
Studies, 48.
5 CONSUMERISM IN CONTEMPORARY CHINA 93
relatively prosperous Chinese who demanded Coke, Pierre Cardin shirts
and countless other new and foreign consumer goods.38 Of 1490 getihu
households in a single district of Tianjin by 1984, for example, 946
had acquired televisions, 433 cassette recorders, 90 refrigerators, and 48
motorcycles.39
Getihu were not alone in their consumerism. Over the first two decades
of the “reform era,” CCP policies, as the state mass media popularized,
that “allowed for some to get rich first” and have higher incomes cre-
ated different classes of newly prosperous and wealthy consumers.40 After
rural workers, the first group to appear was the small-scale household
entrepreneur (the getihu). As many of the 17 million young people “sent
down to the countryside” before and during the Cultural Revolution
decade (1966–1976) returned to Chinese cities seeking work, the Chi-
nese government officially recognized that massive urban unemployment
had to be addressed, but it was not prepared to allocate massive state
resources to solve the problem. In February 1979, the Central Commit-
tee of the CCP approved a report by the State Administration for Indus-
try and Commerce that advised the central government to allow unem-
ployed people with urban “household registrations” to start their own
private businesses, but restricted such businesses to repair, services and
handcrafts. Initially, as leaders felt ambivalent about abruptly reembrac-
ing private enterprise, getihu were forbidden to hire workers, a restric-
tion that was quickly ignored and gradually changed as the range and
size of private businesses expanded.41 Virtually every business surveyed
38 See Andrew Walder. 2015. China Under Mao: A Revolution Derailed. Cambridge:
Harvard University Press, 331. As he notes, China was the most inegalitarian socialist
country in the 1970s, with a Gini coefficient of 0.33.
39 Marcia Yudkin. 1986. Making Good: Private Business in Socialist China. Beijing:
Foreign Languages Press, 30.
40 For an overview of the policies and their effects on income and consumption, see
Karl Gerth. (2011). “Lifestyles of the Rich and Infamous: The Creation and Implication
of China’s New Aristocracy,” in special issue of Comparative Sociology 10(4): 488–507;
and Xiaowei Zeng. 2008. “Market Transition, Wealth and Status Claims,” in David S. G.
Goodman (ed.), The New Rich in China: Future Rulers, Present Lives. London: Routledge,
53–70. For the larger context, see Martin Hart-Landsberg and Paul Burkett. 2005. China
and Socialism: Market Reforms and Class Struggle. New York: Monthly Review Press.
41 Chen Guanren. 2005. “‘Wenge’ you Zhongguo shoujia siying fandian: Yuebin
fandian” (Yuebin Restaurant, the First Privately Owned Restaurant in China After the
‘Cultural Revolution’), initially published in Zhongwai shu zhai 3, 32–35, www.zwszzz.
com/DCFB/bkview.asp?bkid=191395&cid=630477; and Dorothy J. Solinger. 1984.
94 K. GERTH
in Chengdu in the late 1980s had employees that were not, as they were
required to be, registered. Such “employees” seldom included workers
hired off the streets but rather were neighbors, distant relatives, and for-
mer co-workers. By 1985, getihu numbered nearly 10 million. Roadside
bicycle-repair shops, food stalls, and fruit vendors appeared everywhere.
In the countryside, home to three-fourths of these new enterprises, indi-
viduals set up fishing ponds, restaurants, repair shops, and other small
businesses.42 Moreover, as limits on the number of allowable employees
expanded, so did the numbers employed in the private sector, reaching
more than 18 million by 1988.43
In their quest for better lives, individuals did not always wait for state
permission. Many private businesses opened without permission, some-
times with encouragement from local officials authorized to experiment
by allowing limited getihu activities.44 Or, local officials simply looked
the other way, recognizing there was little they could do or wanted to
do. As Chen Shouzhu, then an officer working for the Wenzhou Indus-
trial and Commercial Bureau recalled, officers routinely blew a whistle
to alert peddlers gathered at an open market that they were going to
check for paperwork, giving them time to flee the area without fine or
arrest. Chen also recounted a case of a woman selling dried shrimp in a
local market in Wenzhou. When the police came, she attempted to com-
mit suicide by throwing herself into Nine Mountain Lake. Local cadres
such as Chen took this as a sign of the desperation of the jobless workers
operating private businesses. Later that year, Zhejiang province officially
“Commerce: The Petty Private Sector and the Three Lines on the Early 1980s,” in
Dorothy J. Solinger (ed.), Three Visions of Chinese Socialism. Boulder: Westview Press,
73–111.
42 Bruun, Business and Bureaucracy, 62.
43 Wu Nan (2011) summarizes the trends and statistics for the establishment of getihu
in, “Gaige kaifang hou de xiahai jingshang yanjiu” (A Study of the Trends of Going
into Business After the Start of the Reform and Opening Era) (M.A. thesis, Liaoning
University).
44 The role of local officials in implementing these policies ahead of state authorization is
explored in many places, including Jonathan Unger. 2002. The Transformation of Rural
China. Armonk, NY: M.E. Sharpe; Edward Friedman, Paul G. Pickowicz, and Mark
Selden. 2005. Revolution, Resistance, and Reform in Village China. New Haven: Yale
University Press; and Marc Blecher and Vivienne Shue. 1996. Tethered Deer: Government
and Economy in a Chinese County. Stanford: Stanford University Press, 63–85.
5 CONSUMERISM IN CONTEMPORARY CHINA 95
allowed Wenzhou to start a pilot getihu program and the area became a
national leader in private enterprise.45
Early getihu proprietors often were reluctant to entangle their busi-
nesses with the state and obtain licenses, worrying that once licensed,
official approval could be reversed and getihu activities cited as evidence
that they were a “capitalist tail,” a common insult leveled against anyone
engaged in private commerce in previous decades. Consequently, the CCP
worked hard to change the perception of getihu from reviled “tails of cap-
italism” to “national labor heroes.” Ye Yongguo, for instance, started his
business in 1982, when he was 22, by renting a stall in Huncheng East
Road in Wenzhou, where he sold women’s clothing. As with so many
other getihu, he felt embarrassed to be a petty businessperson. When
acquaintances approached his stall, he hid and had his mother work the
stall until they left. Yet a year later, in 1983, he was named a “National
Advanced Individual Worker” for his successful business. Newspapers and
radios broadcast his story for over a month. By the end of 1983, there
were over 80,000 getihu in Wenzhou alone.46
The CCP played a supportive role by using state-run media to cele-
brate countless other getihu. The case of the first authorized getihu in
Hangzhou, a young woman who worked as a photographer at a famous
tourist site, demonstrates the critical support given by the state and the
ways private businesspeople influenced China in the early 1980s. The
photographer’s case also uncovers one of the many difficult transitions
underlying the shift from the “socialist” to the “postsocialist” era. The
state was involved in determining the shape and pace of these transi-
tions. Hence, despite the rhetoric, this and millions of other getihu cases
were not simply “David vs. Goliath” stories of hardworking getihu pitted
against corrupt state-owned enterprise employees. Rather these cases also
represent the state shifting sides to favor the non-state economy, a shift
that encountered some popular and bureaucratic resistance. The spread
of getihu, then, also tells the story of the erosion of “socialism,” which
had featured the near absence of private enterprise since the late 1950s,
45 You Chengyong, Xiao Xinhua, and Wang Danrong, “Wenzhou getihu: shichang
xianxingzhe—huayuan Zhongguo diyi dai getihu de neiduan lishi” (Wenzhou getihu:Mar-
ket Pioneers—The History of China’s First Generation of getihu). Wenzhou ribao, 7 July
2008.
46 You Chengyong, Xiao Xinhua, and Wang Danrong, “Wenzhou getihu.”
96 K. GERTH
and the creation of its replacement, first with getihu and later by state-
connected (“crony capitalism”), state-owned enterprises (“state capital-
ism”), and multinational corporations.
State sanctioning of getihu was a practical policy implemented to find
work for the millions of youth waiting for state-provided work assign-
ments and “sent-down youth” (also known as “educated youth” or by the
Chinese term, zhiqing ) returning to Chinese cities from the countryside.
The most practical dimension of the policy: millions of such youth found
work with little state assistance and without needing the state to under-
write their jobs. In such accounts, the state allowed private business; peo-
ple seized the opportunity. But the state indirectly led people to become
getihu by narrowing their options. This was the case for Hangzhou’s first
getihu. The state effectively limited Gan Jing’s options by propagating
social castes based on family backgrounds that made it more difficult for
her to find a job within the state sector.47 Gan’s father had been an archi-
tect in Indonesia in the 1950s and, along with his Indonesian-born eth-
nically Han Chinese wife, responded to the call to ethnic Chinese to help
build New China. Shortly after moving to China, however, they were clas-
sified as “Rightists” and relocated to Manchuria to log forests. Toward
the end of the Cultural Revolution decade, they returned to Zhejiang
Province. Gan Jing, who was born in Dalian in 1960 while her father was
working as a lumberjack, remained in China with her paternal grandpar-
ents.48 She was also hurt during the Cultural Revolution after neighbors
mistook the sound of her grandmother using a sewing machine to mend
clothing at night as a telegraph transmitting secret messages overseas. Her
father was labeled a counter-revolutionary and locked up in a makeshift
prison at Yuyao Longquan Mountain in Zhejiang province for 56 days. As
a consequence of her family’s political troubles, when it came time to go
to university, she had to pick a less popular major, settling on the study
of tourism at Zhejiang University. When she graduated in the summer of
1978, she could not find a state work unit willing to employ someone
with her family background. So she went back to Dalian and lived with
47 Wang Qiuhang. 2015. “Yihuang sanshi nian, fangfu jiu zai yanqian” (Everything Still
Remembered Vividly After 30 Years). Lao Zhaopian 99: 73–83. Shandong: Shandong
huabao chubanshe, Issue 99, 73–83.
48 Wen Dao interview of Gan Jing, “Hangzhou diyiwei getihu” (The First getihu in
Hangzhou). Hangzhou ribao, 16 March 2016. http://hzdaily.hangzhou.com.cn/hzrb/
html/2016-03/16/content_2217432.htm. Consulted 16 April 2017.
5 CONSUMERISM IN CONTEMPORARY CHINA 97
relatives, where she apprenticed herself at a state photo studio for a year,
returning to Hangzhou in early 1981 with her honed photography skills.
The state also indirectly encouraged Gan Jing and millions of other
unemployed youth to consider becoming getihu by using state-controlled
media to praise the new policies and provide successful role models.49
Gan herself first read such stories in local newspapers in the spring of
1981. And the state also directly intervened in her decision-making. Gan
and other unemployed youth were reluctant to test the policy locally, fear-
ing police harassment, social stigma, and, above all, removing themselves
from the queue for state jobs and benefits at a time when few voluntarily
abandoned the state sector.50 Although she knew about the getihu policy,
it took visits to her house by officers of labor department and industrial
and commercial department, who were encouraging such unemployed
youth to apply to be getihu. Gan Jing started work easily enough, bor-
rowing 200 yuan and bought a Seagull brand camera and, on November
13, 1981, obtained the first getihu license and badge in Hangzhou. Gan
Jing recalled that because she was the first and because she was a woman,
the cadres, who needed to recruit other getihu, looked after her, making
her registration easy. Moreover, the Tax Bureau gave her a tax holiday for
her first year, an important concession and signature way officials favored
private—even foreign—over state enterprises throughout the postsocialist
era. Others followed, including the second and third getihu in Hangzhou,
also young female photographers.51
To be sure, the Chinese state played a critical role in the early days of
creating openings for getihu and simultaneously undermining the eco-
nomic and social place of employees at competing state-owned enter-
prises. In other words, the state not only passively “let” some get rich
first, state representatives at all levels—from Deng down—actively imple-
mented policies and, at times, intervened in local squabbles to ensure the
success of actual getihu. State support of getihu was essential to their suc-
cess.
49 There were, of course, countless other “Gan Jing’s” lauded by the state. For a
collection of similar success stories, see Wang Lingxu, ed. 1993. Ziyou guodu: gongshang
getihu shenghuo jishi. Shanghai: Shanghai Academy of Social Sciences Press.
50 See also the case of Zhang Huamei, the first getihu in Zhejiang Province, who had
earned a fortune but was still ashamed of being a getihu.
51 Wen Dao, “Hangzhou diyiwei getihu.”
98 K. GERTH
Sanctioning getihu became a new way for the CCP to continue to
shape and endorse consumerism. As over ten million “educated youth”
(zhiqing) returned to Chinese cities from their rustication, joining the
already swollen ranks of those waiting years for government-assigned jobs,
allowing very small-scale private enterprise in the form of getihu was an
inexpensive fix. In addition, getihu filled innumerable holes in the Chi-
nese economy, particularly in basic services ranging from bicycle repairs
to restaurants and food stalls. Moreover, a getihu from Shenyang claimed
that his produce transport business preempted social problems associated
with food price spikes. For instance, in 1987, the price for green peppers
doubled in local markets. One enterprising getihu quickly sourced sev-
eral tens of thousands of the vegetables from Guangdong and Guangxi
provinces, on the other side of the country, which reduced the price below
its pre-spike price.52
Getihu spread consumerism locally as symbols of the advantages of
“market reforms” and the justification for further market policies such
as the expansion of the private economy at the expense of the state-
controlled economy, whether in the privatization of state-owned enter-
prises in the cities or in the disbanding of agricultural communes in the
countryside. While the vast majority of getihu did not get rich quickly (or
at all), in the state-controlled mass media and the popular imagination,
getihu became symbols of a surefire pathway to consumer plenty. This
shift had political implications critical for understanding the transition to
the post-Mao “reform era.” Blame for individual economic problems such
as unemployment or lack of ability to buy the Three Bigs—and respon-
sibility for solving these problems—shifted onto an individual and his or
her relationship to markets rather than to the state and its handling of the
economy. The CCP endorsed a message that said, in effect, if you cannot
find a job and therefore cannot afford the things you desire, use your own
initiative and find your own source of income such as selling homemade
dumplings on a street corner. That solution—self-reliance—had its com-
plement in consumerism. Can’t afford betrothal gifts? Or, unlike your
neighbors, can’t afford a color TV, a refrigerator, washing machine, or
52 Liu Zhiqing, “Ziyou guodu—guanyu getihu jingji quan de baogao he sikao” (A Land
of Freedom—A Report and Reflections on the getihu Economic Circles). Initially pub-
lished in Yalujiang zazhi 9: 1988. Reprinted in Wang Lingxu, ed. 1993. Ziyou guodu—
gongshang getihu shenghuo jishi (A Land of Freedom—A Record of the Business getihu
Economy). Shanghai: Shanghai Academy of Social Sciences Press.
5 CONSUMERISM IN CONTEMPORARY CHINA 99
even a tape recorder—the new must-have Big-Ticket items? Start a busi-
ness and with your earnings, compensate for the traditionally and Mao-era
low-status associated with commerce by buying high-status items in the
form what the Big Three became in the 1980s: a combination of TVs,
washing machines, electric fans, and portable cassette players.
It would be easy to describe the foregoing as the natural consequence
of the shift from socialism to capitalism in the 1980s. Once upon a time,
the state was responsible for everything; then in the 1980s, the market
took command. But such a conclusion overlooks the critical role the state
played in creating getihu and promoting the positive values associated
with them and with the market during the transitions of the 1980s. This
state role extended from the national top, particularly in the “reform and
opening” policies, to their local implementation in the “smashing of the
iron rice bowl” of employment in state-owned enterprises. Neither at the
national level nor at the local level did the state “get out of the way” and
allow markets to reappear spontaneously. Despite his famous mandate that
China “let some to get wealthy first,” Deng Xiaoping and the Chinese
state did not simply step aside and “let” anyone become wealthy. State
policies and their implementation smoothed the path for some to get
wealthy first and, in fact, directly or indirectly pushed them to try.53
Consumerism was an underlying driver of change. The neighbors of
getihu such as Gan Jing envied them not for political reasons—because
they were the first to embrace policy changes—but rather for economic
reasons. Getihu were the first who could afford nice things, the first to
get rich. The perception: the lifestyles of state-owned enterprise employ-
ees, the “labor aristocracy” of the Mao era who had benefitted materi-
ally the most, had fallen behind getihu competitors. And the gap grew
quickly and conspicuously. The Mao era state economy and “socialist”
values were not only dismantled on orders from above but also unraveled
bit-by-critical-bit from below. The “reform” policies were supported and
spread, even in advance of official authorization, because people wanted
the latest Big Three. And each new Three Big item begot the desire, even
53 On the elite political debates over these policies, see Frederick Teiwes and Warren
Sun. 2015. Paradoxes of Post-Mao Rural Reform: Initial Steps Toward a New Chinese
Countryside, 1976 –1981. New York: Routledge; and 2007. The End of the Maoist Era:
Chinese Politics During the Twilight of the Cultural Revolution, 1972–1976. Armonk: M.
E. Sharpe.
100 K. GERTH
a need, for a ten more, making any policy reversal increasingly difficult, if
not impossible.
CCP policy constructed markets and thereby determined who got
rich first, that is, who got to consume what, who could afford the lat-
est Big Three. In the 1980s, the state’s role in making some rich first
was more subtle, leading scholars to interpret the 1980s as a hopeful
decade of mom-and-pop-led entrepreneurial capitalism and freedom in
consumerism. These scholars then contrasted the economic freedom of
the 1980s with the 1990s, when revived state-owned enterprises (SOEs)
became profit-oriented corporations much more directly linked to the
state.54 The history of consumerism in the PRC teaches that there was
no decade of state-free markets and consumerism.
CCP policies effectively promoted consumerism, even during the
avowedly anti-consumerist Mao era. Consumerism, therefore, did not
arise spontaneously as part of “human nature” with the collapse of the
“socialist” experiment after the Mao era. Long before the “reform” era
led by Deng Xiaoping, consumerism spread as part of industrialization.
Advocates of non-consumerist values will find in this history of the ascen-
dance of consumerism in China a formidable foe. As with other places,
consumerism in China has found ways to commercialize everything, even
Christmas, which in China was absorbed into one-long consumer shop-
ping period stretching from Single’s Day (November 11) through Christ-
mas and up until Chinese New Year a month or so later.55 But they may
also find opportunity: more consumerism also has witnessed more oppo-
sition to the values associated with consumerism in recent decades. There
has been both an increase in consumerism and a backlash in the form of
attempts to promote other values. The number of Christians, for instance,
is skyrocketing. According to the Council on Foreign Relations, China
may have the largest number of Christians by 2030, over 240 million
believers. The number is growing so quickly that it is predicted to soon
surpass the number of members in the CCP itself, some 90 million in
54 Yasheng Huang. 2008. Capitalism with Chinese Characteristics. New York: Cam-
bridge University Press. For a thorough critique, see Joel Andreas. 2010. “A Shanghai
Model?” New Left Review 65 (October–November). Another influential study that down-
plays the role of the state in the economic transformation is Victor Nee and Sonja Opper.
2012. Capitalism from Below: Markets and Institutional Change in China. Cambridge:
Harvard University Press.
55 Robert Foyle Hunwick, “Why Christmas Is Huge in China.” The Atlantic,24
December 2014.
5 CONSUMERISM IN CONTEMPORARY CHINA 101
2017.56 However, as consumerism is deeply imbedded in all industrial-
ized societies, the ability of non-consumerist values to resist commodifi-
cation—and defy being turned into consumerist expressions—remains an
open question. Even non-consumerist values such as going to church or
celebrating Christmas have tended to become part of consumerism.57
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CHAPTER 6
Anglican Christians and Modern
Political Economy
Salim Rashid
Faith is belief in things unseen, while Finance is the bringing of savers and
investors together. Since both saving and investing requires some beliefs
about the future, there is an obvious sense in which Finance implies faith
about law, property, society, and so on. But this connection lacks depth
or consequences and seems almost trivial. The more common connota-
tion of faith involves the holding of distant views which motivate lifelong
activity—while stocks and bonds can be instruments in such a life, finance
must have a larger vision to accompany such faith. Ending poverty implies
the diffusion of plenty among a people and economic growth is essential
for the spread of plenty.1Growth requires investment, which in turn is
possible with saving. Since the meeting of savers and investors defines
finance, a more promising approach is to ask how faith has contributed
1As opposed to a simple redistribution of existing wealth, always the Easiest way of
achieving equality of possessions.
S. Rashid (B)
Emeritus Professor, Department of Economics, University of Illinois-Urbana
Champaign, Urbana, IL, USA
e-mail: srashid@illinois.edu
University Professor, East West University, Dhaka, Bangladesh
© The Author(s) 2020
T. Akram and S. Rashid (eds.), Faith, Finance, and Economy,
https://doi.org/10.1007/978- 3-030-38784-6_6
107
108 S. RASHID
to those forms of finance which enable growth with equity—to that eco-
nomic growth which diffuses plenty.
That Christianity is the backbone of European economic growth has
long been a thesis of mine.2Since economies function well only when
ensconced within supportive societies, any hypotheses about the influ-
ence of religion on society, and vice versa, has to relate the economy to
society independently of religion. What societal beliefs are central to a
well-functioning market economy? There are five forms of faith that are
essential for markets to flourish. As a mnemonic, they are called ‘ethics’
below:
1. Legal ethic or the rule of law
2. Consumption ethic or the fitness of commodities
3. Work ethic or the rightness of effort
4. Knowledge ethic or the glory of knowing
5. Support ethic or the unconditionality of social bonds.
Showing how and why Christianity was an essential part, sometimes a
driving force, in each ‘ethic’ between 1000 and 1800 requires lengthy
arguments. Social change typically involves multiple proximate causes.
Tracing each such cause back to its Christian impetus, even when possible,
involves long, complex arguments. Furthermore, since Christians them-
selves freely acknowledged their debts to the Hellenes and the Romans,
separating the roots is almost impossible.3Some of the proofs are easy,
as in showing the widespread prevalence of the support ethic, encour-
aged and institutionalized by Christianity, through the ages. Evidence for
some others, such as the rule of law, become manageable once we look
for the right evidence—not necessarily in the lawbooks, but in the lives
2That Christianity has been an essential pillar of Western civilization has been argued
by many, as my references to Herbert Butterfield and Christopher Dawson will illustrate.
The topic has been argued more recently by such authors as Rodney Stark. Supporting
this general proposition through specifically economic arguments appears to be new. The
focus upon Markets and Christian theology by authors, such as Geoffrey Brennan and
A. M. C. Waterman, is entirely different. David Rose’s highly acclaimed book on The
Moral Foundation of Economic Behavior (Oxford 2011) has only a single reference to
Christianity.
3Fénelon Archbishop of Cambray, chose to describe the Hellenes for their instructive
value. Lives of the Ancient Philosophers (New York, 1900).
6 ANGLICAN CHRISTIANS AND MODERN POLITICAL ECONOMY 109
of the ordinary people.4For the curious reader, especially in an age when
we are intermittently gripped by Luxury Fever,5it may be interesting to
note that the hardest ethic to accept in a Christian society has been that
legitimizing consumption.
I have chosen here a simpler path. Are there questions where the issue
can be decided by arithmetic? Intellectual priorities for several modern
ideas can be determined by dates and by the public impact. If Anglican
Christians have the priority in several such instances, then perhaps the
rest of the case is not hopeless. I will make the case below using the topic
of economic growth, and the impediments to the spread of such growth
from Europe to the rest of the world.
Why are the Anglicans particularly important for my thesis? First,
because Britain led the world into the Industrial Revolution, a point that
needs no elaboration. Secondly, because the Anglican clergy were gener-
ally well educated, with the clerical hierarchy containing many intellec-
tuals notable in their own right. Such education provides the ability to
respond to social change; more importantly, the clergy believed in Chris-
tianity as intellectually equal to facing any intellectual challenge, which
led David Hume to once refer to Christianity as a ‘philosophical supersti-
tion.’6Hence the Anglican clergy repeatedly entered the fray, especially
where the well-being of their flock was concerned. The period I will cover
is the eighteenth century, which has become popularized as the ‘Enlight-
enment.’ One feature of the Enlightenment was its claim that people
should forget about the afterlife and concentrate on being happy here
on earth. But how? If worldly wealth made people happier, then, as I will
show, it was the clergy who were most active in promoting the wealth of
the poor.
A further reason for focusing upon Britain is that there are plenty of
primary materials—in English, the only language I read with some ease.
It is very important to realize, and practically impossible to appreciate,
just how crucial primary materials are for such historical study. When we
approach the lives of those who lived in earlier times, the primary goal
4My colleague, Edward McPhail, and I are working on a paper called ‘Golden Rule
vs Greatest Happiness’, a title inspired by Lord Macaulay’s review of Jeremy Bentham’s
utilitarian prescriptions, where Macaulay stated that Britain did not need the Greatest
Happiness principle because it already possessed the Golden Rule from Christianity.
5The title of a relevant and readable book by Robert Frank (Free Press, 1999).
6And especially pernicious therefore.
110 S. RASHID
must not be to praise or blame, but to understand. Only after we have
tried to see the world through ‘their’ eyes, should we try to evaluate.
Such understanding can only be obtained by trying to see the world as
the people we are studying saw the world. Primary sources allow us to
enter the minds of those we read.
‘Knowledge,’ in the abstract, does not exist. Just as cultures fade away
unless they are remembered and exercised, so too knowledge withers
away. Knowledge has to be recognized, filtered, preserved, transmitted,
reframed, and retransmitted. All these acts need resources—who will com-
mit the time, energy and money? So if something is now ‘common knowl-
edge,’ we have also to ask—in whose interest did this knowledge arise and
awaken? For almost fifty years I have been astonished at the limited under-
standing in the West of the Christianity I will speak of. Primary sources
are the most, perhaps the only, authoritative source for ‘disputed’ issues;
they are also the only way to uncover ‘buried’ issues e.g. how would one
know by reading the webpage of the European Union that the most active
founders of the EU were inspired by their own liberal Catholicism?7
7Due to space limitations, I have had to choose between giving references for my
general thesis or for my specific illustrations. Since my own papers have covered the
specific issues in more detail, I have chosen to give references mostly for the general
thesis about Christianity. This is unfair to many scholars and I apologize in advance. The
references are as follows. Rashid, Salim, “Richard Whately and Christian Political Economy
at Oxford and Dublin,” Journal of the History of Ideas, Vol. 1 (1977), 144–155. Rashid,
Salim, “Richard Whately and the Struggle for Rational Christianity in the Mid Nineteenth
Century,” Historical Magazine of the Protestant Episcopal Church, Vol. 47 (September
1978), 293–311. Rashid, Salim, “Richard Jones and Baconian Historicism at Cambridge,”
Journal of Economic Issues, Vol. 8 (March 1979), 159–176. Rashid, Salim, “Anglican
Clergymen—Economists and the Tithe Question in the Mid Nineteenth Century,” Journal
of Religious History, Vol. 11 (Fall 1980), 64–76. Rashid, Salim, “He Startled as If He Saw
a Spectre: Josiah Tucker’s Proposal for American Independence,” Journal of the History
of Ideas, Vol. 43 (July 1982), 439–460. Rashid, Salim, “Josiah Tucker, Anglican Anti-
Semitism, and the Jew Bill of 1753,” Historical Magazine of the Protestant Episcopal
Church, Vol. 51 (June 1982), 191–201. Rashid, Salim, “Christianity and the Growth of
Liberal Economics,” Journal of Religious History, Vol. 12 (1982), 221–232. Rashid, Salim,
“The Clergymen-Scholars of Economic Development,” This World, no. 5 (Spring 1983),
94–106. Rashid, Salim, “The Irish School of Economic Development: 1720–1750,” The
Manchester School of Social and Economic Studies, Vol. LVI, no. 4 (December 1988),
345–369. Rashid, Salim, “Berkeley’s Querist and Its Influence,” Journal of the History
of Economic Thought, Vol. 12 (Spring 1990), 38–60. Rashid, Salim, “Christianity and
Economics: Is There A Lacuna?” Anglican and Episcopal History, Vol. LX, no. 1 (March
1991), 25–42. Rashid, Salim, “Jonathan Swift, Wood’s Halfpence and Anglican Passive
resistance,” unpublished.
6 ANGLICAN CHRISTIANS AND MODERN POLITICAL ECONOMY 111
Three Remarkable Men:
Berkeley, Swift, and Tucker
I will present the most salient aspects of the economic thoughts of
three eighteenth-century Anglican clergymen, George Berkeley, Jonathan
Swift, and Josiah Tucker. While Berkeley is well-known as a philosopher,
and Swift is even more famous as the author of Gulliver Travels,Tucker
is practically forgotten today, even though in his times he was proba-
bly more in the news than either of the other two. Berkeley provided a
complete and convincing theory of economic development, framed with
Ireland in mind. Swift considered English rule of Ireland to be oppres-
sive and argued for passive resistance as the only path open in the face
of overwhelming force; he rebelled at the thought that Ireland was being
sold out to the English and saw the need for ‘nationalism’ in the Irish to
further their development. Tucker was convinced that War for the sake
of Trade was unchristian, and spent some thirty years showing why rich
countries need not fear the growing riches of poor ones, so they should
not consider force as a solution for any international economic problems.
Two of the three clergymen, Berkeley and Swift, were Anglo-Irish, and
with good reason. Ireland was the first ‘colony’ of Europe, so it was nat-
ural that their experience would adumbrate later events. Ireland was orig-
inally annexed to England by conquest and its subordination to London
was reinforced by the wars of the 1690s. An army of around 12,000 reg-
ular soldiers kept the peace, which was administered by the appointment
of Englishmen to high political and ecclesiastical office, and the control of
Irish legislative decisions through Poynings’s Law of 1495 (not repealed
until 1782) and the Declaratory Act of 1720. Anglo-Irish formed the top
of the Irish pyramid, followed by Scot Presbyterians and the native Irish
Catholics (and the dissenters) were constrained by Penal Laws. England
regarded Ireland as a colony. What is notable is that the revolt against
the English was led by members of the Anglo-Irish elite. William King,
Archbishop of Dublin and the most determined proponent of the Irish
‘nation,’ expressed the Irish position best8:‘Our payments are like the
fleecing of sheep, of which they have no benefit, but must prepare a new
growth out of their bodies or remain naked’.
George Berkeley is known today as the Philosopher of immaterialism
and as a Christian apologist. Even at a young age, his idealism struck
8King to Addison, August 25, 1715.
112 S. RASHID
those whom he met. It was this idealism that led him to project a Col-
lege in the Bermudas, which would serve for the Christian regeneration
of the New World. He left for Rhode Island with the hope of creating a
purer society in the New World. The funds he was promised to start his
venture never came, so he returned to Britain and was exiled to Cloyne,
perhaps the poorest diocese in Ireland. Dedicating himself to the poor
upon reaching Cloyne, Berkeley wrote the most philosophical treatise on
economic development yet written—the Querist. The style is strange, in
that the entire pamphlet consists of queries, appropriate words from one
who is the Querist, until one realizes that every question posed is rhetor-
ical and carries its own answer. To those who asked why a clergyman
would write on economics, Berkeley said, in the introduction to the sec-
ond edition of the Querist ‘To feed the hungry, and clothe the naked,
by promoting an honest industry, will perhaps be deemed no improper
employment for a clergyman who still thinks of himself a member of the
commonwealth.’ Berkeley was praised by many contemporaries—by the
Scots Robert Wallace, Lord Lauderdale, Dugald Stewart, and the English
poets Robert Southey and Samuel Taylor Coleridge. Alexander Pope said
of him, ‘To Berkeley, every virtue under heaven.’
Jonathan Swift took holy orders in 1695 and soon thereafter came
to the attention of the Archbishop of Dublin, William King, mentioned
earlier. King sent Swift to London to canvass for the First Fruits, which
would augment the income of the Irish Anglican church. Swift’s literary
abilities made him many friends in London and he soon came under the
eye of the Tory politicians and used his pen to serve Tory purposes. With
the fall of the Tories and the change of monarch from Queen Anne to
King George I, Swift rapidly fell from grace and went back into ‘exile’ in
Ireland. King again cultivated Swift and when the English sliced off the
independence of the Irish Parliament, the two began to think of system-
atic opposition. Swift began, in 1720, with a pamphlet which carried the
memorable message, ‘Burn everything English, except their people and
their coals.’ When the English tried, in 1722, to introduce a new half-
penny coin by giving the monopoly of it’s production and distribution to
William Wood, an Englishman, Irish anger boiled over. A boycott of the
new coin was successfully organized—quite remarkable in view of the fact
that much money within Ireland was circulated by the army, and refusing
their expenses could grind everyday activity to a halt. Passive resistance, a
form of civil disobedience, had been pioneered earlier by Archbishop San-
croft and the non-jurors; Swift extended it into ordinary politics. What
6 ANGLICAN CHRISTIANS AND MODERN POLITICAL ECONOMY 113
Swift hoped to do was to galvanize the Irish elite into standing united as
‘nationalists’ against the English.
Josiah Tucker began his clerical career as chaplain to Bishop Joseph
Butler, then analyzed the strengths and weaknesses of the English and
French comparative economies 1750, Even at this early stage he appreci-
ated immigrants.
What! must Foreigners, and we know not who, come and take the Bread
out of our Mouths?…Let us see therefore in the next Place, Out of whose
Mouths’ do they take this Bread? If they introduce new Manufactures,
or carry those already established, to greater Perfection, in that Case the
Publick’ is greatly benefited, and no Individual can be injured.9
It is no surprise that Tucker next wrote as a supporter of the Naturalisa-
tion of Foreign Protestants in 1753, then of the Naturalisation of Jews
in 1754. The liberal bent of the Anglican hierarchy can be seen from the
fact that Tucker was appointed tutor to the Prince of Wales in 1756. The
Seven Years War turned him against all wars for the sake of trade and
led to a pamphlet, The case of Going to War for the sake of Trade in
1763. In 1767, he suggested that the Americans were planning indepen-
dence while protesting loyalty. Tucker’s solution was to set the Americans
free. He vigorously opposed war against the Americans; while Tucker’s
arguments gained an appreciation, they were unpopular, so Tucker began
calling himself ‘Cassandra’ because of the derision and neglect he aroused.
Tucker’s formulation of the role of self-interest has rarely been bettered
and was approvingly quoted by libertarians. Tucker unhesitatingly ascribes
secular happiness to self-love and then asks what role reason has to play.10
Not surely to extinguish self-love; that is impossible. And it might be ques-
tioned whether it would be right to attempt even to diminish it. For all
arts and sciences, and the very being of arts and commerce, depend upon
the right exertion of this vigorous and active principle… Consequently, the
main point to be aimed at, is neither to extinguish nor enfeeble self-love,
but to give it a direction, that it may promote the public interest by pursu-
ing its own. And then the spirit of monopoly will operate for the good of
9A Brief Essay on the Advantages and Disadvantages which Respectively Attend France
and Great Britain, with Regard to Trade: With Some Proposals for Removing the Principal
Disadvantages of Great Britain. In a New Method. Josiah Tucker T. Trye (1750), p. 85.
10 Shelton (1981), pp. 91–92.
114 S. RASHID
the whole….and if this is the proper business of reason. Divert therefore
the pursuits of self-love from vicious or improper objects, to those that are
commendable and virtuous.
George Berkeley
Berkeley was but one of many who tried to comment and prescribe for
Ireland between 1680 and 1740. Although space will only permit consid-
eration of Berkeley and Swift, those who elaborated upon the ideas stated
below all took Christianity seriously, hence their relevance to this paper.
Berkeley made two fundamental contributions. First, he provided the first
definition of development that explicitly included all the people:
•‘Whether a people can be called poor, where the common sort are
well fed, clothed and lodged?’
•‘Suppose the bulk of our inhabitants had shoes to their feet, clothes
to their backs, and beef in their bellies, might not such a state be
eligible for the public, even though the squires were condemned to
drink ale and cider?’
Note how equity is written into the definition of development by Berke-
ley. This is also the major change in view that took place after WWII.
Berkeley’s second major contribution lay in clarifying how wealth
arises, a crucially important task in an age when many were distracted
by the acquisition of gold and silver.
•‘Whether the four elements, and man’s labour therein, be not the
true source of wealth?’
This was clarity, not originality. By the time Berkeley came to revise the
Querist in 1743, he clearly noted that it is human capital that is the real
fount of growth.
•‘Whether faculties are not enlarged and improved by exercise?’
•‘Whether the sum of the faculties put into act, or in other words, the
united action of a whole people doth not constitute the momentum
of a State?’
•‘Whether such momentum be not the real stock of a State?’
6 ANGLICAN CHRISTIANS AND MODERN POLITICAL ECONOMY 115
•‘Whether in every wise State the faculties of the mind are not most
considered?’
•‘Whether the momentum of a State doth not imply the whole exer-
tion of its faculties, intellectual and corporeal; and whether the latter
without the former could act in concert?’
I cannot over-emphasize how important Berkeley’s contribution is. The
most important economic fact post WWII is that demonstrated by the
East Asian economies—7% per capita growth is achievable. It is a growth
rate that doubles income every 10 years so if one starts with 10,000 at age
20, one retires with 160,000 at age 60. It means the end of poverty in one
lifetime. The factor that has contributed most to such growth and forced
its attention upon the profession is human capital. So Berkeley is twice-
blessed; in defining development and in focusing upon its most important
cause.11
As this paper is dealing only with concepts like wealth, growth and
the distribution of wealth—what economists like to call ‘real’ variables,
to distinguish them from ‘monetary’ ones like money supply and prices—
it is well to remember that both Berkeley and Swift made notable con-
tributions to money and finance. Swift began the Irish loan fund with
the first 500 pounds he saved. This was then loaned out to those who
could provide a character reference. Swift provided what has come to
be known as micro-credit, with the condition that one needed a refer-
ence who provided a ‘character collateral’ instead of a peer group which
accepted responsibility for the loan and provided an alternative monitor-
ing mechanism for the loan. While the rich must always have given ‘col-
lateral free’ loans to the poor, Swift’s Loan Fund is the earliest institution
to provide micro-credit. Berkeley urged upon his contemporaries the view
that money was only a ticket, a counter, which was useful in creating and
circulating real wealth. While this was a minority view at that time, Berke-
ley’s pithy presentation gave it much clarity and force. Berkeley insisted
11 To be fair to the Irish school, a few words on the general program. What can be done
within the market? The wealthy must encourage and appreciate Irish products; housing,
painting, etc. The poor must acquire a taste for riches, this will elevate their standards
and make them willing to work hard. Absentees who stayed abroad but lived off Irish
revenues should learn to accept their responsibilities in Ireland. When government will not
help, form a voluntary society to propagate your goals—the Dublin Society; in modern
parlance, the first NGO.
116 S. RASHID
that the primary policy tool was a proper monetization of the economy.
While many others had seen the utility of a bank, it was Berkeley who
wanted to create one which functioned for the benefit of the public, and
not for private profit alone. He left his bishopric at Cloyne and spent
a year in Dublin to try and convince the Irish Parliament to authorize
a national Bank, complete with instructions for a constitution. Failure
seems to have embittered Berkeley and he never again tried to initiate
policy changes so directly; he even removed all the queries relating to the
bank in a revised edition of the Querist. Berkeley not only espoused a
national bank, but he also had the prescience to see that a National Debt
can serve to stabilize the entire monetary system.
•Whether the credit of the public funds be not a mine of gold to
England?
•And whether any step that should lessen this credit ought not to be
dreaded?
•Whether such credit be not the principal advantage which England
hath over France? I may add, over every other country in Europe.
•Since the monetization of the National Debt was perhaps Britain’s
most significant financial innovation in this century, Berkeley
deserves more credit for his insight.
Jonathan Swift
The agitation that marked the 1720s in Ireland began when the patent to
coin halfpence was granted to an Englishman, William Wood. The Irish
felt this was a ruinous change and united against the measure. Such unity
took the English administration quite by surprise. The unity was largely
forged by the prose of Jonathan Swift, who posed as a Drapier and wrote
the famous Drapier’s Letters, to arouse and unite Irish opposition. The
plan was to unite in refusing to accept the new coin—seemingly impossi-
ble, but it succeeded, and Swift hereafter forever linked with the cause of
liberty for Ireland. The Drapier’s Letters make for poor economics, and
Swift’s genius lay in writing in popular language and using such argu-
ments as would arouse Irish enthusiasm for the boycott. In the midst of
the debates, Swift wrote a self-conscious sermon about passive resistance
6 ANGLICAN CHRISTIANS AND MODERN POLITICAL ECONOMY 117
which needs appreciation. He was almost certainly influenced by Arch-
bishop Sancroft, who had earlier grappled with the question ‘How does
one respond to overwhelming force?’
Sancroft’s life and career were full of contrary events. As a royalist, San-
croft believed kings were appointed by God, so the beheading of Charles I
meant that he had to transfer his loyalty to Charles II. So he lived in exile,
so to speak. Upon the Restoration of Charles II, Sancroft was rewarded
with desirable church appointments and rapid promotions, leading from
the Deanery of St Paul’s in 1664 to the Archbishopric of Canterbury
in 1677. When Charles died, James II was crowned by Sancroft him-
self. As James II began his policy of favoring Catholics, Sancroft found
himself torn between his loyalty to his King and his loyalty to the Angli-
can church. When proclamation of the Declaration of Indulgence was
required by James in 1687, Sancroft and six other bishops petitioned the
King. This was viewed as an act of rebellion and James imprisoned the
seven bishops. Exercising the right to petition was a form of democratic dis-
obedience. Despite the imprisonment, five of the seven bishops remained
loyal to James even after James fled upon the arrival of William and Mary.
Sancroft, eight other bishops, and 400 members of the clergy, refused to
take the oath of allegiance to William and Mary and were known as the
non-jurors. They were all fired from their posts and largely slipped into
out of the history books. Faced with a choice between their conscience and
their positions, the non-jurors sacrificed all worldly ambition. Not a few or
a dozen or even a hundred but four hundred did so. The Anglican church
pioneered passive resistance in the petition to James, loyalty in the face of
imprisonment and the refusal to take the oath of loyalty to William and
Mary.
The sermon, ‘Doing Good,’ was delivered in 1724, at a time when
Swift was working very hard and taking a considerable risk to keeping
Irish resolve united in rejecting the new coinage of Wood.12 How could
the Irish obtain a complete repeal of Wood’ halfpence? The sermon pro-
vides a map of the intellectual challenges in organizing movements of pas-
sive resistance. Swift begins by noting the pervasive power of self-interest,
but does not consider it to be ill; rather, and surprisingly, Swift takes self-
interest to be a directive of the Creator. ‘The law of nature, which is the
12 Swift, Jonathan, ‘Doing Good,’ in Herbert Davis (ed.), The Prose Works of Jonathan
Swift, Vol. 9 (Basil Blackwell, Oxford, 1955 [1724]), pp. 232–240. As the sermon is
short, I have avoided page references for readability.
118 S. RASHID
law of God, obligeth me to take care of myself first.’ This self-love is com-
monly meant to extend to one’s neighbors, as is well-known. Swift has to
motivate hundreds of thousands, not to avoid the market, or even be
selective in what to trade or consume, or wear, but only to refuse Wood’s
Halfpence as payment for any trade—all other coin was fine. So he devel-
ops the theme that undergirds his subsequent argument—small sacrifices
by me which enable great gains for my neighbor become duties incum-
bent upon me. ‘But if, by a small hurt and loss to myself, I can procure a
great good to my neighbor, in that case his interest is to be preferred.’
Swift has rehearsed a well-known point about loving our neighbor, but
immediately extends it to a political context by referring to ‘óur neighbor
in a public capacity’ which is but another way of referring to one’s fellow
citizens.
there is yet a duty of a more large extensive nature incumbent on us; which
is, our love to our neighbour in his pubic capacity, as he is a member of that
great body the commonwealth, under the same government with ourselves;
and this is usually called love of the public, and is a duty to which we are
more strictly obliged than even that of loving ourselves; because therein
ourselves are also contained, as well as our neighbors, in one great body.
(p. 233)
Swift continues with the point that it was this love of the public that was
termed ‘virtue’ by Hellenes and Romans.
Swift then lists three reasons why this duty to the public is so strongly
binding, before going on to elaborate why they are important and how
individuals can display such virtue.
First, that there are few people so weak or mean, who have it not some-
times in their power to be useful to the public….
Secondary, That it is often in the power of the meanest among mankind
to do mischief to the public.
And, lastly, that all willful injuries done to the public are very great and
aggravated sins in the sight of God. (pp. 113–114)
It is the second point that requires close attention because Swift has to
persuade thousands of poor shopkeepers and peasants that they must con-
tinue to refuse the new coin—none of them must feel that their individual
actions are too insignificant to matter, hence to follow their own conve-
nience and accept the coin. Swift insists that even the meanest can do
6 ANGLICAN CHRISTIANS AND MODERN POLITICAL ECONOMY 119
mischief, and then notes the importance of such actions as the princi-
pal source of public misfortune. ‘it is often in the power of the mean-
est among mankind to do mischief to the public. And hence arise most
of those miseries with which the states and kingdoms of The earth are
infested.’ (p. 116). Swift gives a recent economic example from the cloth
trade, where the bad wares of some had hurt the trade of all, to bring
home the force of such behavior ‘… we now find by experience, that the
meanest instrument may, by the concurrence of accidents, have it in his
power to bring a whole kingdom to the very brink of destruction’ Swift
jumps from the cloth trade to coin without any warning and claims that
the same selfishness is still ‘endeavouring to finish his work; and hath
agents among ourselves, who are contented to see their own country
undone, to be small sharers in that iniquitous gain, which at last must
end in their own ruin as well as our.’
In the analytical language of economics, Swift was dealing with a public
goods issue.13 Everyone would gain from a good currency, but no one
individual would have an incentive to maintain the monetary system since
his own gain or loss was infinitesimal compared to the aggregate.
Every man is upon his own guard for his private advantage; but, where the
public is concerned, he is apt to be negligent, considering himself only as
one among two or three millions, among whom the loss is equally shared,
and thus, he thinks, he can be no great sufferer.
This prescient statement was followed by the recognition that material
self-interest alone was inadequate to prevent an ill outcome; what was
needed was a sense of concern for the public, thus harking back to the
principle that he had established earlier—enduring a small harm becomes
a duty if great good can be thereby attained.
Against which there can be no defence, but a firm resolution in all honest
men, to be closely united and active in shewing their love to their country,
by preferring the public interest to their present private advantage.
13 The public goods argument of Swift is also highlighted in McPhail-Rashid (2012).
McPhail, Edward, and Salim Rashid, “Swift and Berkeley on Economic Development,”
in T. Boylan, R. Prendergast and J. Turner (eds.), A History of Irish Economic Thought
(Routledge, London, 2010), pp. 32–55.
120 S. RASHID
There are two ordinary acts which can prove to be very harmful—the
spreading of rumors and making false accusations. Swift singles these out
for attention, since either can cause the will of the people to falter, and
warns his hearers not to indulge in either. There is no evidence that the
sermon itself was effective in arousing further opposition to Wood’s Half-
pence.14 That was the function of the Drapier’s Letters. Rather, the ser-
mon tells us how Swift thought about this unusual obligation and how
he rationalized his activity with his role as pastor. Swift was greatly moved
by Sancroft and when the English tried to force Wood’s halfpence on
the Irish, he willingly put his talents to work in arousing public non-
cooperation.
To Swift, this was the beginning of a more persistent rejection by the
elite of the plums given by the English to keep Irish separatist tendencies
in check. Why does this matter? Because simple accumulation in a poor
country normally leads to the flight of the rich. As all the good things of
life are more available in rich countries, even more so the opportunities
for the talented, those who are rich or talented in a poor country will
be tempted to leave home and migrate. However, understandable such
mobility of brains and capital may be, it necessarily drains the poor coun-
try. Something must hold you to your country. This something cannot
be material comfort, because, by assumption, you are a poor country. A
simple way to describe this immaterial glue which keeps talent at home is
‘Nationalism.’ Developing countries have produced many heroic figures
who could have easily made much money by migrating—Lee Kuan Yew
of Singapore is a recent example—yet chose to stay at home because they
believed in developing ‘their’ country.15 The flight of talent is perhaps the
single greatest problem facing economic development today. Swift under-
stood the problem and tried to mold Irish Nationalism with his writings.
14 The awareness that in using the pulpit, Swift risked arrest and trial, comes out
in one of his last sentences. ‘And this, I am sure, sure, cannot be called meddling in
affairs of state.’ How Swift could claim that, after months of public struggle between
the Westminster, the Lord Lieutenant and the Irish Parliament, the question of Wood’s
halfpence ‘cannot be called meddling in affairs of state’ must be left one’s imagination. It
was fortunate for Swift that the sermon was not widely noticed.
15 Per contra, those poor countries whose leaders have concentrated on building their
bank balances, despite the immense resources the poor countries possess, have stagnated
in poverty.
6 ANGLICAN CHRISTIANS AND MODERN POLITICAL ECONOMY 121
Josiah Tucker
Josiah Tucker was born in 1713, graduated from Oxford, and took holy
orders in 1736. In 1737 Bishop Joseph Butler urged Tucker to write a
critique of Methodism, which may have led to Tucker’s promotion to
the rectorship of St Stephen’s, Bristol, in 1749. Tucker wrote next to a
widely read pamphlet comparing and contrasting the British and French
economies. In subsequent years he argued vigorously for the value of
immigrants and defended foreign protestants and then Jews. These writ-
ings led Bishop Hayter of Norwich to ask Tucker to compose a book on
Commerce for the edification of the Prince of Wales, the future George
III. This just as the Seven Years War began. Tucker’s liberal and pacific
ideas found no home. The stupendous victories of Britain in the Seven
Years War led Tucker to venture with a pamphlet asking whether there
could be a case for going to war for the sake of trade. Bitter about
the public adulation for the victorious Pitt the Elder, Tucker exclaimed:
‘Heroism is the wish and envy of all Mankind…let a Prince but feed his
subjects with the empty diet of military fame, it matters not what he does
besides…’ The basis of Tucker’s objection was that a benevolent God
would not have created a world where mutual prosperity was incompati-
ble with peace.
•‘Do the inhabitants of two adjoining towns or counties believe that
they have an unalterable enemity with each other? Or do they believe
that the Government they live under can ensure that the good of one
is also the benefit of the other?’
•‘If therefore this is the case with respect to human Governments
…how then comes it to pass, that we should ascribe so much Imper-
fection, such Want of Benevolence, such Partiality, nay such premed-
itated Mischief to that great and equal Government, which presideth
over all?’
The choice of the question and the nature of the solution were provided
to Tucker by his faith—what then remained? To demonstrate the correct-
ness of the conclusion through argument. Tucker got his chance when
he pleaded that the American colonies should be left to go free—every
colony had aspired to independence as soon as it was able to do so, it
was only the Americans who protested loyalty even as they took steps to
ensure independence. Do the Christian thing and, ‘Let them go,’ Tucker
122 S. RASHID
urged, so that we can become friends and Christians again. The political
arguments do not concern us here, but the economic ones are worth not-
ing, as they exemplify what it means to analyze a question of fact, what
economists call ‘positive’ ones, while approaching the issue with faith, or
what economists call a ‘normative’ approach.
In 1774 Tucker published Four Tracts, perhaps the best-selling of all
his writings. He begins This is most evident in a later pamphlet developing
the same theme, when Tucker argues that rich nations need never be
overtaken by poor ones, provided they preserve their industry, ingenuity,
and activity.
1. They have the advantage in institutions and infrastructure
2. They have the means and the capacity for inventing more
3. They have the means to direct research more productively
4. Higher wages induce more exertion and invention
5. Riches permits a finer, more productive division of labor
6. The products of the rich, sold competitively, are cheaper and better
7. Capital is cheaper and more productive in a rich country.
Whether you agree or disagree, these are clear arguments. Bernard Sem-
mel has demonstrated how they were influential in Parliamentary debates
on Ireland in the 1770s.16 Tucker does not rest on general propositions.
In Tracts 2 and 3, Tucker lays out his proposal for separation and its ben-
efits. He applies his ideas to the American colonies, since it was widely
feared that the loss of the colonies would be ruinous to British com-
merce. Tucker argued that since ‘trade is not carried on for the sake of
friendship, but of interest,’ it only remained to ask where the interest of
the colonists would lie after independence. Commodity after commodity
is examined, and Tucker carefully points out how Britain would remain
the best market for the colonists. Pitch, Tar and Naval stores, then Pipe-
staves and Lumber, then Rice and Tobacco and so on. The beginning
of Tucker’s reply to the Rice and Tobacco will sufficiently illustrate his
method.
16 Semmel, Bernard, The Rise of Free-Trade Imperialism (Cambridge University Press,
Cambridge, 1970).
6 ANGLICAN CHRISTIANS AND MODERN POLITICAL ECONOMY 123
[Objection] In case of a Separation, from whence shall we procure Rice and
Tobacco? Answer 1: This objection turns on two suppositions, viz 1. That
after a Separation, the Virginians and Carolinians will not sell Tobacco and
Rice to English merchants, for a good price, and ready money; and 2dly,
that Tobacco and Rice can grow in no part of the Globe, but in Virginia
and Carolina. Will any man in his senses affirm either of these things?
So independent was Tucker that he irritated both Court and Opposition.
But he did not care. Just a fifth tract was in the press, Tucker heard about
the defeat of Cornwallis, and placed a postscript: ‘I am at a loss what
to say on this occasion. To congratulate my country on being defeated is
contrary to that decency which is due to the public. And yet, if this defeat
should terminate in a total separation from America, it would be one of
the happiest events that has ever happened to Great Britain.’
Tucker was read by many influential scholars and politicians. Bernard
Semmel has shown how the ideas of Tract 1 were to be the foundation of
what has been called ‘Free Trade Imperialism’—the use of free trade for
colonizing ends, an end that was never Tucker’s aim! Dr. Samuel Johnson
said of Tucker that ‘No person, however, learned, can read his writings
without improvement’; while John Wesley was led to reverse his initial
stand against the Americans and for war. In June 1775, he had supported
subduing the colonies but by December he wrote ‘But I say as Dean
Tucker, “Let them drop.”’
Conclusion---What Price Ignorance?
Berkeley, Swift and Tucker covered some of the principal issues facing
both developed and developing countries. But this by no means indi-
cates the overall impact of Christian social thought. Richard Whately was
the most effective popularizer of free markets in the nineteenth century;
if we turn to policy, Bishop Fleetwood on Index Numbers and Henry
Thornton on Banking come readily to mind; on the wider field of social
economics, the Rev. Richard Jones is a major nineteenth-century figure.
Churchmen were active in all forms of social reform such as the reform
of prisons (Howard), the relief of debtors (Oglethorpe and Hanway) or
slavery (Wilberforce). The critical role of Anglicanism persists in impor-
tance even as we cast a wider net. From the time when the judicious
Hooker pleaded for a religion that possessed both richness and structure,
to the efforts of many Christians to further science and innovation, to the
124 S. RASHID
philosophical acumen of Cudworth, Clarke, and King, there is a contin-
uous chain of Anglican engagement on all issues concerning society. One
cannot begin to penetrate the life of England without facing Anglicanism.
If Christians have been continuously engaged with the financial and
monetary aspects of everyday life, why has the relevance of Faith and
Finance not been more prominent? Every age has a ‘climate of opin-
ion’ and Carl Becker explained well its importance when treating the
philosophes.17
Whether arguments command assent or not depend less upon the logic
that conveys them than upon the climate of opinion in which they are
sustained. What renders Dante’s argument or St Thomas’ definition mean-
ingless to us is not bad logic or want of intelligence, but the medieval
climate of opinion---those instinctively held preconceptions in the broad
sense, the Weltanschauung or world pattern…To understand why we can-
not easily follow Dante or St Thomas…it is necessary to understand…the
nature of this climate of opinion.
This climate of opinion decides the content of the possibilities open to us,
and as Herbert Butterfield noticed, it is the greatest obstacle to appreci-
ating the importance of Christianity.18
Certain characteristic notions have become prevalent concerning the past,
certain views about the process of things in time, and certain impressions
…of the panorama of the centuries…is in reality a more serious obstruction
to Christianity than the natural sciences.
Anyone who has bothered to read the literature produced by and for
everyday folk cannot fail to be impressed by the depth and intensity of
Christian devotion present throughout society. It strains all credulity to
accept the insignificance of these acts of piety in creating a society where
certain virtues were widely approved and corresponding vices discour-
aged.
17 Becker, Carl, The Heavenly City of the Eighteenth Century Philosophers (Yale, New
Haven, 1932), p. 5.
18 Butterfield, Herbert, Christianity and History (Collins, Fontana, London, 1957),
p. 13.
6 ANGLICAN CHRISTIANS AND MODERN POLITICAL ECONOMY 125
Some authors, such as Jacob Viner,19 have striven hard to be fair, and
Viner’s writings provide some of the best clues on sources and issues. But
such fairness has not been the norm. whether it be by the selection of
material, or by their treatment of those selected, the Christian contribu-
tion has been presented as the ‘opposition’ to ‘modernity.’ In Peter Gay’s
widely acclaimed The Enlightenment, has the significant subtitle, ‘The Rise
of Modern Paganism,’ which clarifies why the light was needed. It was to
lead Europe away from the darkness of Christianity and the fears of a
future life. In the early pages, Gay feels some scholarly pangs about the
singularity of his heroes20
As I shall show over and over again…ideas and attitudes generally asso-
ciated with atheistic, subversive philosophes…were the common prop-
erty of most educated men in the eighteenth century…the war they [the
philosphes] fought was half won before they joined it.
Not only is this claim of fighting a war half done poorly documented
in what follows, Peter Gay failed to ask about those questions which
were either ignored by the philosophes or where they fell behind their
Christian contemporaries. The victory of such partial scholarship has been
so total that, upon hearing William Temple lament the lack of Christian
involvement with economics, Lord Keynes had to remind the Archbishop
of Canterbury about the reality of Christian economic thought in the
eighteenth century. Apart from Hume, Smith, Mandeville, Cantillon, and
Bentham, Keynes said21: ‘I can think of no one important in the devel-
opment of politico-economic ideas… who was not a clergyman, and in
most cases a high dignitary of the Church.’
The extent of the misrepresentation of the role of Anglican Clergy-
man in promoting England’s economic development is almost comical.
The noted economic historian, R. H. Tawney, referring to the eighteenth
century, said of the Anglican Church in the face of increasing wealth of
19 Viner, Jacob, The Role of Providence in the Social Order: An Essay in Intellectual
History (American Philosophical Society, Philadelphia, 1972). See also Viner, Jacob, “Re-
ligious Thought and Economic Society,” in Jacques Melitz and Donald Winch (eds.),
History of Political Economy, Vol. 10, No. 1 (Spring 1978).
20 Gay, Peter, The Enlightenment: An Interpretation (Vintage Books, New York, 1968),
pp. 22–23.
21 Iremonger, F. A., William Temple (Oxford, Oxford University Press, 1948), pp. 438–
439.
126 S. RASHID
Britain that it did not give guidance because it had none to give. Tawney
chooses Josiah Tucker as the embodiment of the new emptiness of Angli-
canism. It is as though Capitalism, Riches and Wealth were necessarily
immoral according to Tawney. Tucker, however, himself had met such
attitudes and responded by expressing surprise at people who shouted
‘Church in Danger’ whenever any liberal economic measure were pro-
posed.22
I really think, the Church of England comes nearest to perfection of any
since the Apostles days; and, under that persuasion, I confess it appears to
me a most injurious Treatment, to be always representing her to be in a
crazy, tottering Condition, ready to fall and never out of Danger.
Trapped between the omissions of its critics and the ignorance of its
friends, Anglicanism has been hobbled. In the process, our capacity to
understand the past has been numbed. Whether we agree or disagree
with religion, there is little doubt that Christianity was the energy of the
everyday lives of ordinary people in the West. In the words of Christopher
Dawson,23
A Christian civilisation is certainly not a perfect civilization, but it is a
civilization which accepts the Christian way of life as normal and frames its
institutions as the organs of a Christian order. Such a civilsation actually
existed for a thousand years, more or less. It was a living and growing
organism---a great tree of culture which bore rich fruit in its season.
With this energy to rely upon, the civilization of the West was built.
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Haven: Yale, 1932.
Butterfield, Herbert. Christianity and History, 13. Fontana, London: Collins,
1957.
22 Tucker, Josiah, Reflections on the Naturalisation of Foreign Protestants (London,
1953), pp. 57–58.
23 Dawson, Christopher, The Historic Reality of Christian Culture (Harper, New York,
1960), p. 36. For a longer and more eloquent statement of the point see Butterfield, op.
cit., pp. 170–171.
6 ANGLICAN CHRISTIANS AND MODERN POLITICAL ECONOMY 127
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Open Access This chapter is licensed under the terms of the Creative Commons
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the permitted use, you will need to obtain permission directly from the copyright
holder.
CHAPTER 7
Islamic Finance, Consumer Protection
and Public Policy
Faisal Kutty
Introduction
In a complaint filed against me years ago with the Law Society of Upper
Canada (LSUC) (now renamed the Law Society of Ontario), the pro-
fessional governing body of lawyers in Ontario, a client stated: “What
this lawyer had me engage in is akin to me committing incest with my
mother.”1The complaint arose from an “Islamic mortgage,” the closing
and registration of which had been facilitated by my office. Essentially an
Islamic finance company, UM Financial (“UM”), had advanced the funds
1“There are seventy-two types of riba, the least of which is like a man committing incest
with his mother.” Narrated by al-Tabaraani in al-Awsat, classified as saheeh by al-Albaani
in Saheeh al-Jaami’, no. 3537; See also Farooq, Mohammad Omar. December 27, 2009.
“Riba, Interest and Six Hadiths: Do We Have a Definition or a Conundrum?” Review
of Islamic Economics 13(1), 105–141; Farooq argues that this hadith used to expand the
term riba to include all forms of interest does not hold up.
F. Kutty (B)
Dwayne O. Andreas School of Law, Barry University, Orlando, FL, USA
e-mail: fkutty@barry.edu
© The Author(s) 2020
T. Akram and S. Rashid (eds.), Faith, Finance, and Economy,
https://doi.org/10.1007/978- 3-030-38784-6_7
129
130 F. KUTTY
to close a house purchase. UM claimed to have structured the transac-
tion as a diminishing musharaka.2My role was to ensure that the home-
buyers, a couple, received clear title to the house being purchased and
the investor (lender), in this case the Islamic finance company, UM, had
security for their “Islamic loan.” As part of the transaction, my office had
the homebuyer clients sign standard real estate closing documents as well
as documents governing and structuring the relationship between UM
and the homebuyers.3As is typical in such transactions, I was on a joint
retainer for UM and the homebuyers.
Following the registration of the transaction, one of the buyers more
thoroughly studied the documents and the structure, all of which were
developed and prepared by UM. He concluded that the transaction was
not “Islamic” or “Shari’ah-compliant.”
Because my client’s attempts to have the situation addressed by UM
were unsuccessful, he filed a complaint against me with the LSUC. He was
persistent and adamant in his position. He apparently harassed the LSUC
non-stop, including showing up in person at its offices and essentially
refusing to leave the premises unless it addressed the complaint. He also
reportedly quoted to its members the hadith mentioned in footnote one.
The LSUC responded by dispatching its chief investigation counsel
and a forensic auditor to deliver the complaint notice to me personally.4
Its members were obviously concerned, and I spent some time educating
them about Islamic finance in my boardroom. The complaint was even-
tually dismissed with the direction that going forward I had to advise my
clients that I was not providing them with “Islamic finance” or “Shari’ah-
compliance” advise.5
2A diminishing musharakah is a diminishing partnership.
In a diminishing partnership (also known as a “declining balance partnership” or
“declining musharakah”), one partner’s share is drawn down while it is transferred to
another partner until the entire sum is passed over. Such a structure is common in home-
buying where the lender (generally a bank) buys a property and receives payment from a
buyer (via monthly rent payments) until the whole balance is paid off.
For more information, see Musharakah,https://www.investopedia.com/terms/m/
musharakah.asp#ixzz5Yq5Mbfzd.
3In a conventional mortgage transaction, our office would have prepared standard real
estate documents and the bank’s documents.
4Other lawyers with whom I spoke at the time were shocked to learn that the Law
Society officials showed up in person.
5There is also the related issue that lawyers are not insured to provide non-legal advice.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 131
This incident illustrates a number of issues, but for the purposes of this
chapter, I will focus on the following:
1. The importance of faith or religion for some people when it comes
to financial decisions; and
2. The potential consumer protection concerns with respect to regu-
lating what is or what is not “Islamic” or “Shari’ah-compliant” in
western financial markets.
These two issues run as the central themes through the discussion in
this paper. This chapter is organized into four parts. Part I provides an
overview of the origins, sources, and history of Islamic finance. Part II
provides an introduction to the basic principles of Islamic finance. Part
III touches upon some of the regulatory and policy concerns and issues.
Part IV concludes with some observations about future prospects and
recommendations.
Origins, Sources and Brief History
My client’s complaint centered around the concern that the loan he nego-
tiated, and that my office had helped him finalize, was not consistent
with Islamic finance rules. Islamic finance rules evolved out of Islamic
economics, which in turn takes its inspiration from the Shari’ah.6The
Islamic financial system is based on religious teachings that emphasize
that everything belongs to God and that human beings are accountable
to God for their conduct (and intentions) on earth. Human beings have
been tasked to be trustees over God’s wealth and must discharge this role
within a framework that prioritizes, among other things, social and eco-
nomic justice. The ethical, moral, social, and legal principles at the core
of Islamic finance are derived from the Shari’ah (loosely and inaccurately
referred to as Islamic law).7It essentially involves balancing the material
6Shari’ah and Islamic law will be used throughout the paper though the two do not
necessarily have the same meaning. Some writers inaccurately use them interchangeably.
Kutty, Faisal. 2010. “The Myth and Reality of ‘Shari’a Courts’ in Canada: A Delayed
Opportunity for the Indigenization of Islamic Legal Rulings.” University of St. Thomas
Law Journal 7, 559.
7For an explanation of Shari’ah, see Kamali, M.H. 1989. “Source, Nature and Objec-
tives of Shari’ah.” Islamic Quarterly 33, 211–233; Part 5 of Kutty, Faisal. 2010. “The
132 F. KUTTY
and the spiritual as well as the individual and collective interests within a
God-centered ethical framework.
The Islamic finance system seeks to provide banking and finance ser-
vices that comply with Islamic principles.8It must operate within ethical
and religious constraints, but it should also further social and economic
justice. By complying with Islamic principles, the Islamic finance system
aims to achieve a more equitable distribution of wealth and income, and
it encourages full employment, socioeconomic justice, and stability.9In
essence, it can be described as a modified free enterprise system that
locates itself in the middle of the spectrum between socialism and cap-
italism.
Islamic finance, in its broadest sense, has existed since the early years
of Islam, starting with the social and economic justice teachings of the
Prophet Muhammad (Peace be upon him—[pbuh]),10 as detailed in the
Quran and Sunnah (teachings and sayings attributed to the Prophet).11
Islam teaches that it is the continuation and culmination of the messages
sent to previous prophets and messengers. Consistent with this view, at its
core many of the central teachings and beliefs in Islam, including teach-
ings on social and economic justice, are very similar to those of other
major religious traditions. Historians of early Islamic civilization have doc-
umented that banking activities similar to those performed today took
Myth and Reality of ‘Shari’a Courts’ in Canada: A Delayed Opportunity for the Indige-
nization of Islamic Legal Rulings,” University of St. Thomas Law Journal 7, 559; see also
Kutty, Faisal. September 24, 2014. “The Kutty ‘Islamic Law’ Flowchart,” http://www.
islamiclawflowchart/.
8Maljichi, Drita N. 2014. “Islamic Financial Markets and Institutions.” Vizi one 21,
291–292; Shaikh, Salman Ahmed. January 14, 2010. “A Brief Review & Introduction
to Practiced Islamic Banking & Finance.” Retrieved from https://ssrn.com/abstract=
1536943 or http://dx.doi.org/10.2139/ssrn.1536943; El-Gamal, Mahmoud A. 2006.
Islamic Finance: Law, Economics and Practice. Cambridge: Cambridge University Press.
9El-Ghattis, Nedal. “Islamic Banking’s Role in Economic Development:
Future Outlook.” Retrieved from https://pdfs.semanticscholar.org/cfc6/
6f09435a5445c2cadd2d18937823635c5d3d.pdf; Iqbal, Zamir and Mirakhor, Abbas.
2011. An Introduction to Islamic Finance: Theory and Practice, 2nd ed. Asia: Wiley.
10 Peace be upon him (pbuh) is a term customarily used when referring to the Prophet
Muhammad.
11 El-Gamal, Mahmoud A. 2006. Islamic Finance: Law, Economics and Practice.Cam-
bridge: Cambridge University Press; Reda, Ayman. 2018. Prophecy, Piety, and Profits: A
Conceptual and Comparative History of Islamic Economic Thought. New York: Palgrave
Macmillan.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 133
place from the early days of Islamic civilization.12 In fact, the Islamic
empire had a well-developed financial system, complete with a legisla-
tive system governing transactions, a judicial system enforcing contracts,
different commercial papers and banknotes, and licensed bankers, which
contributed to the development of modern banking practices.13 How-
ever, under the influence of European colonizers, many Islamic countries
adopted Western banking models in the nineteenth century. It was not
until the mid-twentieth century that Islamic financial institutions began to
reemerge, partly driven by political Islam and a renewed sense of Islamic
identity.14 Since then, the global market for Islamic finance has become
one of the fastest-growing segments of global finance with a growth rate
between 10–12% annually and a “Shari’ah-compliant” industry worth
well over $2 trillion USD in 2015 and projected to grow to $3.2 tril-
lion by 2020 according to Thomson Reuters.15
Once largely limited to the Middle East and Southeast Asia, “Shari’ah-
compliant” finance and products are gaining attention outside these tra-
ditional markets. It made its first appearance in the West in 1978 with
12 Alharbi, Ahmad. 2016. “Development of Islamic Finance in Europe and North
America: Opportunities and Challenges.” International Journal of Islamic Economics and
Finance Studies 2(3), 109–110; Udovitch, A. 1979. “Bankers Without Banks: Commerce,
Banking and Society in the Islamic World of the Middle-Ages.” In The Dawn of Mod-
ern Banking (ed.) by the Centre for Medieval and Renaissance Studies, Los Angeles:
University of California; Al-Hamdani, Khaled. 2000. al-Nizam al-Masrafi fi al-Dawlah
al-Islamiyah (The Banking System in the Islamic State); Islamiyat al-Maarifa,Winter,
pp. 15–41; Labib, S. March 1969. “Capitalism in Medieval Islam.” Journal of Economic
History 29(1), 79–140; Issawi, C. 1966. The Economic History of the Middle East 1800–
1914. Chicago: University of Chicago Press; Chachi, Abdelkader. 2005 A.D/1426 A.H.
“Origin and Development of Commercial and Islamic Banking Operations.” Journal of
King Abdulaziz University: Islamic Economics 18(2), 3–25.
13 Ibid.
14 Alharbi, Ahmad. 2016. “Development of Islamic Finance in Europe and North
America: Opportunities and Challenges.” International Journal of Islamic Economics
and Finance Studies 2(3), 112; Zaman, Arshad. 2011. “Sayyid Abu’l A‘la Maududi on
Islamic Economics: A Review Article.” Islamic Studies, 50(3–4), 303–323. Retrieved from
https://ssrn.com/abstract=2225711; Kuran, Timur. 2004. Islam and Mammon: The Eco-
nomic Predicaments of Islamism. Princeton: Princeton University Press.
15 Thomson Reuters. 2015. Canada Islamic Finance Outlook 2016 at 58, http://www.
tfsa.ca/storage/reports/Canada_Islamic_Finance_2016.pdf. See also Staff Writer. August
7, 2016. “Islamic Finance Assets Forecast to be Worth $3.2trn by 2020.” Ara-
bian Business,https://www.arabianbusiness.com/islamic-finance-assets-forecast-be-worth-
3-2trn-by-2020-641156.html.
134 F. KUTTY
the establishment of the Islamic Finance House Universal Holding S.A.
in Luxembourg.16 Today London has a significant presence in Islamic
Finance.17
North America, considered to have one of the most stable bank-
ing systems in the world, has also witnessed growing interest in Islamic
finance.18 “Shari’ah-compliant” products have been offered in Canada
and the United States since the 1980s.19 The significant, relatively afflu-
ent, and religiously observant Muslim population in North America repre-
sents a substantial consumer market for investments, pensions, insurance,
mortgages, and commercial businesses, as along with day-to-day bank-
ing. Islamic finance only began to get real traction in the United States
in 1990s, when “the New York branch of the United Bank of Kuwait
obtained two interpretive letters issued by the Office of the Comptroller
of the Currency to offer Islamic retail banking services in the country.”20
The first letter, issued in 1997, permitted the use of ijarah,21 whereby the
bank would act as a “riskless principal,” buying real estate at the request
of the lessee, then leasing it back to them until the final payment, at
which time the lessee would be given title.22 The second letter, issued
in 1999, allowed murabaha-based financial products. As in the previous
16 European Central Bank (Occasional Paper Series, No. 146, June 2013), “Is-
lamic Finance in Europe.” Retrieved from https://www.ecb.europa.eu/pub/pdf/scpops/
ecbocp146.pdf; Alharbi, Ahmad. 2016. “Development of Islamic Finance in Europe and
North America: Opportunities and Challenges.” International Journal of Islamic Eco-
nomics and Finance Studies 2(3), 112; di Mauro, Filippo, Caristi, Pierluigi, Couderc,
Stéphane, Di Maria, Angela, Ho, Lauren, Kaur Grewal, Baljeet, Masciantonio, Sergio,
Ongena, Steven R.G., Zaheer, Sajjad. April 15, 2013. “Islamic Finance in Europe.” ECB
Occasional Paper No. 146. Retrieved from SSRN: https://ssrn.com/abstract=2251204.
17 Langah, Waseem Ahmad. February 25, 2009. Islamic Banking in the UK: Challenges
and Opportunities. Retrieved from https://ssrn.com/abstract=1349170.
18 Alharbi, Ahmad. 2016. “Development of Islamic Finance in Europe and North
America: Opportunities and Challenges.” International Journal of Islamic Economics and
Finance Studies 2(3), 112; Thomson Reuters. 2015. Canada Islamic Finance Outlook
2016 at 58, http://www.tfsa.ca/storage/reports/Canada_Islamic_Finance_2016.pdf.
19 Ibid. at 124.
20 Ibid.
21 See discussion below.
22 Alharbi, Ahmad. 2016. “Development of Islamic Finance in Europe and North
America: Opportunities and Challenges.” International Journal of Islamic Economics and
Finance Studies 2(3), 124–125.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 135
scheme, the bank had to act again as a “riskless principal,” thereby per-
mitting the activity. While the bank ceased operations in the United States
in 2000, it bought and leased sixty homes for American Muslims.23 Since
2000, many small Islamic financial institutions have entered the market,
and many conventional financial institutions have begun to offer Islamic
products with varying degrees of compliance with Islamic principles.24
Islamic finance is also gaining interest in Canada and is expected to
increase as Canada has a large, growing, young, and observant Mus-
lim population.25 The 2011 National Household Survey found Muslims
make up 3.2% of Canada’s population.26 The community is expected
to reach 6.6% by 2030.27 While some Islamic financial products are
available, no major financial institution has successfully marketed any
“Shari’ah-compliant” products or services.28 The first Islamic financial
body in Canada—the Islamic Co-operative Housing Corporation Ltd.,
a grassroots, community-based project—was established in Toronto in
1979.29 Since then, several other Islamic financial institutions have been
established throughout Ontario and Quebec. One such company, UM
Financial, founded in 2004, became one of the primary Islamic finan-
cial providers in Canada. It partnered with Central 1 Credit Union
of Canada and marketed “Islamic mortgages.” From 2006 to 2007,
UM Financial provided $86.1 million in home financing. The com-
pany was essentially relabeling, using legal fictions/assignments, drafting
parallel documents, and clouding disclosure to unsophisticated buyers.
23 Ibid. at 125.
24 Ibid. at 126.
25 Ibid.
26 Statistics Canada. 1991. 2011 National Household Survey: Data Tables, 99-010-
X2011032. Ottawa.
27 Ibid.
28 Ibid.
29 Khan, Sheema. April 7, 2008. “It’s Time to Take Interest in Islamic Financ-
ing.” The Globe and Mail,https://www.theglobeandmail.com/opinion/its-time-to-take-
interest-in-islamic-financing/article22501330/;seealsohttp://www.ansarhousing.com/
about_us.aspx.
136 F. KUTTY
The company declared bankruptcy in 2011, and its founder and chief
Shari’ah advisor were charged with fraud.30
The fact remains that there is a growing appetite for Islamic finance
products even in North America. Inevitably, there will be unscrupulous
actors who prey on the lack of knowledge among consumers both of
finance and Islamic principles, non-existence of religious standards or reg-
ulatory bodies, lack of government oversight and issues and obstacles in
structuring “Shari’ah-compliant” products and transactions.
Introduction to the Principles of Islamic Finance
Islamic finance is differentiated from conventional finance by the fact that
Islamic finance is God-centered and informed by principles of Islamic law.
Prohibitions
Islamic finance has become synonymous with a system that, at its core,
prohibits: (1) usury (riba); (2) taking excessive or unnecessary risk or
gambling where one party benefits only due to the loss of the other
(qimar and maysir); (3) uncertain transactions/speculation (gharar ); and
(4) the limitation in dealing with products, industries and services consid-
ered prohibited (haram), such as alcohol, gambling, illegal drugs, certain
weapons, pornography, and other areas deemed harmful to society or the
individual, etc.
Riba (“Usury”)
For most people aware of Islamic finance, the first thing that comes to
mind is the prohibition of riba, which is understood by most Muslims as
interest per se. The basis for this prohibition of riba is said to be rooted in
30 Ha, Tu Thanh. 2014. “RCMP charge missing Toronto Financier with $4.3-
Million Mortgage Fraud.” The Globe and Mail,https://www.theglobeandmail.com/
news/national/rcmp-charge-missing-toronto-financier-with-43-million-mortgage-fraud/
article16972349/; Nasser, Shanifa. 2017. “Muslim Mortgage Kingpin Led Investigators
on ‘Treasure Hunt’ for Missing Gold: Crown.” CBC News,https://www.cbc.ca/
news/canada/toronto/omar-kalair-muslim-madoff-shariah-mortgages-1.4390002;Pasha,
Shaheen and French, Cameron. 2011. “Canada Bankruptcy May Hurt Islamic Finance
in N. America.” Reuters,https://www.reuters.com/article/canada-islamic-bankruptcy-
idUSL5E7MT3KY20111205.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 137
the Quran and the teachings of the Prophet Muhammad (peace be upon
him), the Sunnah. Contrary to the understanding of most Muslims, the
definition of riba has been contested and evolving throughout Islamic
history and is often the subject of intense debate among Islamic jurists,
scholars, and bankers.31 A conservative/orthodox understanding, which
is the majority view, holds that the term applies to any form of interest and
precludes its payment or collection.32 A minority, but growing, interpre-
tation opines that riba refers to “usury” or excessive compounded inter-
est.33 The two underlying principles that are used as the basis to prohibit
riba are the Quran’s34 stipulation that only active trading serves as the
basis for increasing wealth and the unfairness of manipulating desperate
“poorer members of society by unscrupulous merchants.”35 The prohibi-
tion and the principles behind riba have historically been central tenets of
31 Azhar, Rauf. November 15, 2009. Economies of an Islamic Economy, Themes in Islamic
Studies,Vol.6,https://doi.org/10.1163/ej.9789004179370.i-470; Fadel, Mohammad
Riba. Forthcoming. “Efficiency, and Prudential Regulation: Preliminary Thoughts,” Wis-
consin International Law Journal 25(4), 656; Islamic Law and Law of the Muslim World
Paper No. 08-18; El-Gamal, Mahmoud A. 2003. “‘Interest’ and the Paradox of Con-
temporary Islamic Law and Finance.” Fordham International Law Journal 27(1), Article
6, https://pdfs.semanticscholar.org/8cb7/0cc8baaf911ad52f932205a1722f76e3f049.pdf;
Karasik, Theodore, Wehrey, Frederic, and Strom, Steven. 2006. “Islamic Finance in a
Global Context: Opportunities and Challenges.” Chicago Journal of International Law
7(2), 379.
32 Kuran, Timur. 2004. Islam and Mammon: The Economic Predicaments of Islamism.
Princeton: Princeton University Press; Farooq, Mohammad Omar. 2007. “Stipulation of
Excess in Understanding and Misunderstanding Riba: The Al-Jassas Link.” Arab Law
Quarterly 21(4), 285–316.
33 Arberry, Arthur John. 1996. The Koran Interpreted: A Translation. New York: Simon
and Schuster; Kuran, Timur. 2004. Islam and Mammon: The Economic Predicaments of
Islamism. Princeton: Princeton University Press; Farooq, Mohammad Omar. 2007. “Stip-
ulation of Excess in Understanding and Misunderstanding Riba: The Al-Jassas Link.” Arab
Law Quarterly 21(4), 285–316.
34 The verses against interest (riba) can be found in the Surah Al-Baqara chapter, verses
275–280, the Al-Rom chapter, verse 39, and the AI-Nisa chapter, verses 159–160; e.g.
“Those who swallow usury cannot arise except as he arises whom the devil prostrates by (his)
touch. That is because they say trading is like usury. And Allah has allowed trading and
forbidden usury ”(Quran, 2.275).
35 See Aziz, Zeti A. 2008. “Enhancing Interlinkages and Opportunities: The Role of
Islamic Finance.” Islamic Finance: Global Trends and Challenges 18, 5–7; National Bureau
of Asian Research ed. (quantifying annual growth rate of Islamic finance at fifteen to
twenty percent).
138 F. KUTTY
several major religions (e.g., Judaism36 and Christianity37). According to
some observers, around 1000 A.D. there existed little difference between
Christian Europe and the territories under Muslim rule pertaining to their
attitudes toward interest.38 Indeed, the Catholic Church lifted the ban on
interest only in the mid-nineteenth century.39 Moreover, there are banks
in Israel that cater to Jews who refuse to pay or take interest.40
Qimar (“Excessive Risks”) and Maysir (“Wagering”)
Transactions or dealings that involve unnecessarily or unreasonably risky
undertakings in the hopes of achieving something are also prohibited.41
This includes qimar, which literally means betting and wagering.42
Qimar refers to taking ownership of something valuable (mal) through
36 In Judaism, interest was prohibited as per the following: “If you lend money to any
of My people with you who is poor, you shall be to him as a creditor, and you shall
not exact interest from him” (Ex. 22:25); “He that hath not given this money upon
usury; nor taken reward against the innocent. He that doeth these things: shall never fall”
(Psalm 15); “To a foreigner you may lend upon interest, but to your brother you shall
not” (Deut. 23.19); See Reda, Ayman. 2018. Prophecy, Piety, and Profits: A Conceptual
and Comparative History of Islamic Economic Thought, New York: Palgrave Macmillan.
(Jews, Christians, etc.); see also Ahmad, Shaikh Mahmud. 1981. “Judaism and Interest.”
Islamic Studies 20(1), 47–82.
37 In Christianity, it is discouraged per the following: “Love your Enemies and Do
Good, Lend, Expect Nothing in Return” (Luke 6:35); See Reda, Ayman. 2018. Prophecy,
Piety, and Profits: A Conceptual and Comparative History of Islamic Economic Thought.
New York: Palgrave Macmillan (jews, Christians, etc.); see also Mayyasi, Alex. 2017. “Of
Money and Morals.” Aeon. Retrieved from https://aeon.co/essays/how-did-usury-stop-
being-a-sin-and-become-respectable-finance.
38 Schoon, Natalie and Nuri, Julinda. 2012. “Comparative Financial Systems in Judaism,
Christianity and Islam: The Case of Interest.” Retrieved from https://ssrn.com/abstract=
2126503 or http://dx.doi.org/10.2139/ssrn.2126503.
39 Weber, Max. 1979. Economy and Society. Berkeley, CA: University of California Press.
40 Seznec, Jean-François. 1999. “Ethics, Islamic Banking and the Global Financial Mar-
ket.” Fletcher Forum of World Affairs 23(1), 161.
41 Uddin, Md Akther. 2015. Principles of Islamic Finance: Prohibition of Riba,
Gharar and Maysir. Kuala Lumpur, Malaysia: INCEIF, https://mpra.ub.uni-muenchen.
de/67711/1/MPRA_paper_67711.pdf; Abdullah, Atikullah Hj. 2013. “The Elements of
Qimar (Wagering) and Gharar (Uncertainty) in the Contract of Insurance Revisited,”
https://ibtra.com/pdf/journal/v9_n2_article5.pdf.
42 Ibid.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 139
some form of wager.43 Islamic law unequivocally prohibits every zero-sum
scenario through wagering on very risky outcomes.
This prohibition also extends beyond qimar to maysir,whichis
broader and extends to all kinds of gambling and games of chance.44
Evolving out of the pre-Islamic practice of divining arrows whereby seven
persons gambled for shares (portions) of an allotted prize, the objection
is to the fact that the agreement between the players is based entirely on
wishful odds that have no real statistical probability.
In essence, these prohibitions aim at preluding “effortless gain” gen-
erated from any dealings.”45 It is quite obvious that there will be a wide
range of diverse opinions on what would or would not fall into these
categories.
Gharar (“Prohibition on Excessive Risk and Deception”)
Another central pillar of Islamic finance is the prohibition of excessive risk,
uncertainty and deception all grouped under the heading of gharar .46
Obviously, business and investment always involve elements of risk, but
disproportionate uncertainty or risk would violate Islamic principles. This
of course rules out speculative trading. According to Muhammad Ayub,
Islamic jurists have defined gharar as “the sale of a thing which is not
present at hand, or the sale of a thing whose aqibah (consequence) is not
known, or a sale involving hazard in which one does not know whether
it will come to be or not.”47 The prohibition against gharar tends to
prohibit major financial products, according to most but not all Islamic
finance scholars, such as “forward contracts, swap agreements, hedges,
43 Ibid.
44 Ibid.
45 Nizami, Shah M. 2011. “Islamic Finance: The United Kingdom’s Drive to Become
the Global Islamic Finance Hub and the United States’ Irrational Indifference to Islamic
Finance.” Suffolk Transnational Law Review, 34(1), 219.
46 Uddin, Md Akther. 2015. Principles of Islamic Finance: Prohibition of Riba,
Gharar and Maysir. Kuala Lumpur, Malaysia: INCEIF, https://mpra.ub.uni-muenchen.
de/67711/1/MPRA_paper_67711.pdf; Abdullah, Atikullah Hj. 2013. “The Elements of
Qimar (Wagering) and Gharar (Uncertainty) in the Contract of Insurance Revisited,”
https://ibtra.com/pdf/journal/v9_n2_article5.pdf.
47 Ayub, Muhammad. 2007. Understanding Islamic Finance, 58. West Sussex: Wiley.
Retrieved 30 August 2018.
140 F. KUTTY
options, derivatives, and financial insurance.”48 It also prohibits the sale
of things that do not yet exist, which some scholars have interpreted to
include, for example, fish that a fishing boat setting out to sea may catch
on its expedition, a crop that has yet to be planted, and even an unborn
animal.49
Haram (“Prohibited”) Goods and Services
Another dictate is that Islamic financial institutions must not be involved
in areas prohibited by Islamic law, such as alcohol, tobacco, pork, gam-
bling, pornography, and weapons.50 The degree in kind and level to
which these are adhered to depend on the philosophy and strictness of
the scholar or Shari’ah body, which may range from absolute prohibition
to those who allow it to within a de-minimis threshold. Some of these
prohibitions, to varying degrees, are similar to those found in the socially
responsible investing (SRI) movement within conventional banking.51 In
fact, in this context there may be some similarities between conventional
48 Nizami, Shah M. 2011. “Islamic Finance: The United Kingdom’s Drive to Become
the Global Islamic Finance Hub and the United States’ Irrational Indifference to Islamic
Finance.” Suffolk Transnational Law Review 34(1), 219; See also Richardson, Christopher
F. 2006. “Islamic Finance Opportunities in the Oil and Gas Sector: An Introduction to an
Emerging Field.” Texas International Law Journal 42, 119–123; Nehad, A. and Khanfar,
A. 2016. “A Critical Analysis of the Concept of Gharar in Islamic Financial Contracts:
Different Perspectives.” Journal of Economic Cooperation and Development 37(1), 1–24,
http://www.sesric.org/pdf.php?file=ART14103001-2.pdf.
49 Nehad, A. and Khanfar, A. 2016. “A Critical Analysis of the Concept of Gharar in
Islamic Financial Contracts: Different Perspectives.” Journal of Economic Cooperation and
Development 37(1), 1–24, http://www.sesric.org/pdf.php?file=ART14103001-2.pdf.
Waemustafa, W. 2015. “Theory of Gharar and Its Interpretation of Risk and Uncer-
tainty from the Perspectives of Authentic Hadith and the Holy Quran: Review of Litera-
tures,” http://repo.uum.edu.my/18860/1/Wae_gharar.pdf.
50 Jamaldeen, Faleel. “Seven Prohibited Industries in Islamic Financial Investments,”
https://www.dummies.com/personal-finance/islamic-finance/seven-prohibited-industries-
in-islamic-financial-investments/; El-Gamal, Mahmoud A. 2006. Islamic Finance: Law,
Economics and Practice. Cambridge: Cambridge University Press.
51 Hayat, Usman. 2013. “Islamic Finance and Socially Responsible Investing.” CFA
Institute News,https://www.cfainstitute.org/-/media/documents/article/cfa-magazine/
2013/cfm-v24-n2-2.ashx; Ferruelo, Elizabeth. 2012. “Why Socially Responsible Invest-
ing and Islamic Finance is on the Rise.” Forbes,https://www.forbes.com/sites/
ashoka/2012/11/01/why-there-is-high-growth-potential-in-the-nexus-between-socially-
responsible-investing-and-islamic-finance/#5813dab0e3f1.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 141
and Islamic finance. Particularly, since the financial crisis of 2008, there
has been pressure within Western countries for banking to become sim-
pler, less reliant on highly leveraged capital structures, and for a more
deeply ingrained sense of ethics.52
Islamic Finance Products and Mechanisms
The foregoing restrictions do not mean that Islamic finance is averse to
business or taking calculated and reasonable risks to generate a profit.
On the contrary, Islam is understood to encourage trade and the pro-
ductive use of capital.53 As a result of these restrictions around riba,
qimar/maisir, gharar, and the prohibition on engaging with haram
goods and services, Islamic financial institutions have had to devise prod-
ucts and services that work around these “impediments” while generat-
ing profits. One of the fundamental conceptual shifts induced by Islamic
finance is that transactions must be linked to assets using equity-based
instruments and contracts as opposed to debt-based instruments. It also
means that, at least in theory, there ought to be more emphasis on social
justice, fairness, and ethical concerns. Provided that it is equity-based and
avoids the above prohibitions, profits can be generated through the real-
location and management of risk and reward between capital providers
and users.54
At its simplest level conventional financing takes the form of equity or
debt.55 Equity financing means giving an ownership interest or shares
of common stock to an investor with its attendant risk of investment
loss in exchange for the opportunity to participate in gains or profits.
Debt financing involves borrowing money and not giving up ownership
or an interest in the asset or going concern. The creditor or lender has its
52 Ibid.
53 Archer, Simon and Karim, Rifaat Abdel. 2002. Islamic Finance: Growth and Innova-
tion. London: Euromoney Books.
Azhar, Rauf. November 15, 2009. Economies of an Islamic Economy, Themes in Islamic
Studies,Vol.6,https://doi.org/10.1163/ej.9789004179370.i-470.
54 El Qorchi, Mohammed. 2005. “Islamic Finance Gears Up.” Finance and Development
42(4), 46; El-Gamal, Mahmoud A. 2006. Islamic Finance: Law, Economics and Practice.
Cambridge: Cambridge University Press.
55 Hanif, Muhammad. 2014. “Differences and Similarities in Islamic and Conventional
Banking.” International Journal of Business and Social Sciences 2(2), 26.
142 F. KUTTY
loan secured through a mortgage or through personal property security
regimes.56 In some cases it may even be an unsecured loan. The debtor
must, of course, invariably pay a fixed return in the form of interest,
which a majority of Islamic scholars translate as riba. Islamic-compliant
products attempt to shift this paradigm toward joint-venture and limited
partnership structures whereby the profit and loss are shared in agreed-
upon proportions. To comply with the various rules and prohibitions,
numerous investment vehicles and contracts have been developed over the
years that have been approved by Islamic jurists (although not all instru-
ments and structures and their permutations or iterations are accepted
by all scholars). These include, among others, murabahah,ijarah,mud-
harabah,musharaka,istisna,takaful,andsukuk.57
Murabahah (“Rent to Own”)
The most commonly used transaction is the murabahah, where a com-
modity or asset is purchased by the financier for the buyer, who then pays
the cost plus a fixed “profit” or mark-up over a period of time.58 The pur-
chase and sale price, costs, and the profit margins must be clearly agreed
to between the parties at the outset. The asset must remain under the
ownership of the financing institution until the agreed marked-up price
for the asset is fully paid by the customer.59 In some ways, it is similar to a
rent-to-own type of arrangement. Most Islamic finance companies offer-
ing “Shari’ah-compliant” mortgages use a variation of this model, or at
least claim to do so. One of the major problems from an Islamic perspec-
tive is that, contrary to the theory, in practice the Islamic finance com-
pany does not keep title for liability, practicality, or out of legal/regulatory
56 Security is registered in a land registry office when real property is involved or
through a personal property security registration regime on a priority and attachment
basis.
57 Hussain, Mumtaz, Shahmoradi, Asghar, and Turk, Rima. 2015. “An Overview
of Islamic Finance,” IMF Working Paper, https://www.imf.org/external/pubs/ft/wp/
2015/wp15120.pdf; El-Gamal, Mahmoud A. 2006. Islamic Finance: Law, Economics and
Practice. Cambridge Cambridge: University Press.
58 Qazi, Irfan. 2008. “Murabaha Financing vs. Lending on Interest.” Retrieved from
https://ssrn.com/abstract=1803651 or http://dx.doi.org/10.2139/ssrn.1803651;Ram-
mal, Hussain Gulzar. 2004. “Financing Through Musharaka: Principles and Application.”
Business Quest. Retrieved from https://ssrn.com/abstract=1442430.
59 Ibid., Qazi, Irfan.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 143
considerations. When one factors in the use of security in the form of a
mortgage versus keeping title, amortization schedules that do not match
the term, terms that are less than the length required to pay off the full
value, rates pegged to the market interest rate, etc., it becomes easy to
imagine how the lines between interest/profit and conventional/Islamic
finance get blurred.
A traditional murabahah structure is also employed quite often in the
trade finance context.60 For instance, a customer needs to buy goods but
cannot afford funds up front, but there is a financier prepared to facilitate
the transaction by advancing the funds. The financier buys the goods, pay-
ing full price on delivery, and upon receipt of the goods immediately sells
it at a mark-up (a single payment at a later date or pre-agreed schedule)
within an agreed-upon time. Depending on the reference points used,
profit calculation formula, and amortization schedule used, this muraba-
hah could easily mirror a conventionally financed transaction with Arabic
terminology substitutions.
It works slightly differently in the commodity contexts. In the com-
modity context, upon receipt of the murabahah financed goods, the cus-
tomer will immediately sell the goods back into the market with a mark-up
immediately or in a deferred transaction.61 Unlike a traditional muraba-
hah (where the financing is to facilitate acquisition of a property or equip-
ment that the customer actually wants), a commodity murabahah struc-
ture can be used to facilitate the flow of funds to an entity, even where
the entity does not want the underlying commodity (raising the concern
about money making money in the Islamic context). The only additional
requirement is that the commodity is not haram.
Murabahah finance appears to be the closest to a conventional loan
and the most straight-forward to effect. For this reason, as well as the way
that murabahah is used today by Islamic finance companies, the muraba-
hah structure has attracted the most criticism from Islamic scholars and
60 Murabahah Trade Financing. Maldives Islamic Bank, http://www.mib.com.mv/
pages/view/murabahah-trade-financing; El-Gamal, Mahmoud A. 2006. Islamic Finance:
Law, Economics and Practice. Cambridge: Cambridge University Press.
61 For an explanation of murabaha,seehttps://nscpolteksby.ac.id/ebook/files/Ebook/
Accounting/Ethica%20Handbook%20of%20Islamic%20Finance/25.%20MURABAHA.pdf;
El-Gamal, Mahmoud A. 2006. Islamic Finance: Law, Economics and Practice. Cambridge:
Cambridge University Press.
144 F. KUTTY
finance experts for violating the spirit of Shari’ah principles while blindly
adhering to form.
Ijarah (“Lease Finance”)
Another commonly used transaction is the ijarah, where the financier
buys an asset from a party to lease to another party or from the customer
to then lease it back to the customer for a fixed period, after which the
lessee commits to repurchase the asset.62 The financial institution is enti-
tled to a predetermined rental fee.63 In essence, the ijarah structure is
the equivalent of a traditional finance lease. In the Islamic context, it is
arguably the second most common instrument, most often used for real
property or asset financing. The asset is essentially sold to the customer at
the end of the ijarah contract (or in the event of default) for a pre-agreed
buyout price plus any accrued and unpaid rent. In some situations, the
underlying asset may be split up (actually or theoretically on a percentage
basis) to allow for a sculpted reduction in the purchase price payable or
to allow for partial (voluntary or involuntary) payments of the purchase
price during the term of the ijarah contract (to mirror amortization or
early repayment under a conventional term loan). Again, Islamic jurists
have differences of opinion as to what is permitted and what is not in the
context of ijarah.
Mudharabah (“Profit/Loss Sharing”)
Mudharabah refers to a profit-sharing contractual agreement between
a financial institution or investor and an entrepreneur.64 This can be
62 Hussain, Mumtaz, Shahmoradi, Asghar, and Turk, Rima. 2015. “An Overview
of Islamic Finance,” IMF Working Paper, https://www.imf.org/external/pubs/ft/wp/
2015/wp15120.pdf; El-Gamal, Mahmoud A. 2006. Islamic Finance: Law, Economics and
Practice. Cambridge: Cambridge University Press.
63 Zaher, Tarek S. and Hassan, M. Kabir. 2001. “A Comparative Literature Survey
of Islamic Finance and Banking.” Financial Markets, Institutions & Instruments 10(4),
155–199.
64 Hussain, Mumtaz, Shahmoradi, Asghar, and Turk, Rima. 2015. “An Overview
of Islamic Finance,” IMF Working Paper, https://www.imf.org/external/pubs/ft/wp/
2015/wp15120.pdf; El-Gamal, Mahmoud A. 2006. Islamic Finance: Law, Economics
and Practice. Cambridge: Cambridge University Press; Shaikh, Salman Ahmed. 2011.
“A Critical Analysis of Mudarabah & A New Approach to Equity Financing in Islamic
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 145
viewed as “venture capital.” At its core, it is a contract that provides
for profit sharing between the investor and the entrepreneur who con-
tributes skill, time, or goodwill. While the financial institution provides
the necessary capital (rabb-ul-mal ), the entrepreneur (mudarib)provides
the operational capabilities. In the event of a loss, the financial institu-
tion loses its capital and the entrepreneur loses his or her invested labor
and other intangible contributions.65 The salvage value belongs to the
entrepreneur based on the Shari’ah dictate that the rabb-ul-mal should
absorb all losses. Under this arrangement, money contributed by the cap-
ital provider (rabb-ul-mal) is invested by the entrepreneur (mudarib) in
the business and is used to acquire “assets” (interpreted very broadly in
this context so that no tangible asset is required) with the goal of profit
generation.66 The mudharabah agreement typically stipulates that the
mudharabah will generate profits periodically for set periods at a pre-
agreed scheduled rate. All profit generated by the business is distributed
between the rabb-ul-mal and the mudarib as previously agreed. Similar
to the ijarah model, the agreements provide mechanisms for repayment
of the original investment amount and for termination (on expiry, or ear-
lier default).
Musharaka (“Partnership with Profit/Loss Sharing”)
Musharaka is literally translated as “sharing.”67 Musharaka is a partner-
ship in which both the customer and financial institution provide capital
Finance.” Journal of Islamic Banking & Finance. Retrieved from https://ssrn.com/
abstract=1930173.
65 Shaikh, Salman Ahmed. 2011. “A Critical Analysis of Mudarabah & A New
Approach to Equity Financing in Islamic Finance.” Journal of Islamic Banking & Finance.
Retrieved from https://ssrn.com/abstract=1930173; Bacha, Obiyathulla I. 1997. “Adapt-
ing Mudarabah Financing to Contemporary Realities: A Proposed Financing Structure.”
INCEIF the Global University in Islamic Finance,https://mpra.ub.uni-muenchen.de/
12732/1/MPRA_paper_12732.pdf.
66 Ibid.
67 Musharakah Investopedia,https://www.investopedia.com/terms/m/musharakah.asp;
Hussain, Mumtaz, Shahmoradi, Asghar, and Turk, Rima. 2015. “An Overview of
Islamic Finance,” IMF Working Paper, https://www.imf.org/external/pubs/ft/wp/
2015/wp15120.pdf; El-Gamal, Mahmoud A. 2006. Islamic Finance: Law, Economics
and Practice. Cambridge: Cambridge University Press; Rammal, Hussain Gulzar. 2004.
Financing Through Musharaka: Principles and Application. Business Quest. Retrieved from
https://ssrn.com/abstract=1442430.
146 F. KUTTY
and share profits and losses based on a contract between the two par-
ties concluded before the transaction is finalized. It is among the more
common methods utilized to engage in project finance, real-estate pur-
chases, letters of credit, and other investment projects.68 Another form
of musharakah that has surfaced relatively recently is the “diminish-
ing musharakah.” According to this concept, an investor and customer
or partner will participate either in the joint ownership of property or
equipment, or in a joint commercial enterprise. Under the diminishing
musharakah model, the share or interest of the investor will be paid off
periodically along with the agreed profit. The investor’s share or interest
will therefore decrease and will eventually be paid off fully leaving the
customer or partner the sole owner of the property, or the commercial
enterprise, as the case may be.
A contract of mudharabah normally presumes that the mudarib
(entrepreneur) has not invested capital to the mudharabah.Themudarib
is responsible for the management only, while all the investment comes
from rabb-ul-mal. Conversely, the musharaka is the preferred vehicle
when the mudarib also wishes to invest capital into the business of
mudharabah.Insuchcases,musharakah and mudharabah are combined
together. This is typically how it is done in the real estate market.
Istisna (“Agreement for Future Delivery”)
Istisna involves a funding party agreeing to produce, procure, manufac-
ture, or construct and deliver a commodity or an asset at a predetermined
future time at an agreed price to another party.69 The asset or commodity
is sold for an amount equivalent to the aggregate of all phased payments
made plus a profit margin. This vehicle is often used in project or real
estate development financing to facilitate the advance of monies during
the construction phase. In such circumstances, to facilitate a long-term
68 Qadri, Shahzad. 2007. “Islamic Banking—An Introduction.” Business Law Today
17(6), 59.
Rammal, Hussain Gulzar. 2004. “Financing Through Musharaka: Principles and Appli-
cation.” Business Quest. Retrieved from https://ssrn.com/abstract=1442430.
69 Hussain, Mumtaz, Shahmoradi, Asghar, and Turk, Rima. 2015. “An Overview
of Islamic Finance,” IMF Working Paper, https://www.imf.org/external/pubs/ft/wp/
2015/wp15120.pdf; El-Gamal, Mahmoud A. 2006. Islamic Finance: Law, Economics and
Practice. Cambridge: Cambridge University Press.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 147
financing arrangement, it is very often paired with an ijarah. On comple-
tion of the underlying asset, the istisna will be replaced by an ijarah over
the completed asset.
Takaful (“Mutual Benefit Society”)
Takaful, which is often translated as Islamic insurance, is essentially a
mutual benefit society or co-operative system that aims to serve as a safety
net for members in case of loss.70 It serves as an alternative to conven-
tional insurance products that are seen as violating Islamic restrictions.
Takaful policyholders make contributions to a mutual investment pool
and agree to guarantee each other.71 Contributions are based on the type
of coverage policyholders require and their personal circumstances. Sim-
ilar to conventional insurance, a takaful contract specifies the nature of
the risk and time period of coverage.72
Sukuk (“Investment Certificate”)
Sukuk, commonly referred to as Islamic bonds, is more accurately trans-
lated as “Islamic investment certificates.”73 A traditional bond is best
understood as a contractual debt obligation, and the bond issuer is obli-
gated to pay the bondholder both the principal as well as the interest at
agreed-upon intervals.74 The primary difference between sukuk and a tra-
ditional bond is that sukuk is technically not debt and does not pay the
security holder interest.75 Instead, sukuk holders become shareholders,
70 For an explanation of takaful,seehttps://www.lexisnexis.com/uk/lexispsl/
bankingandfinance/document/391289/5BNP-XNT1-F185-X3CF-00000-00/Takaful_
overview.
71 Ibid.
72 Ibid.
73 Thomas, Abdulkader, Cox, Stella, and Kraty, Bryan. 2005. Structuring Islamic
Finance Transactions. Linnius; Box, Tamara and Asaria, Mohammed. 2005. “Islamic
Finance Market Turns to Securitization.” International Financial Law Review 24, 21.
74 Koch, Michael. “Sukuk vs Conventional Bonds: A Study into the
Performance of Islamic Bonds,” https://pdfs.semanticscholar.org/e830/
9e00e7de945a3e61ae4447208ee7a02e3b0f.pdf.
75 Abdel-Khaleq, Ayman and Richardson, Christopher. 2007. “New Horizons for
Islamic Securities: Emerging Trends in Sukuk Offerings.” Chicago Journal of Interna-
tional Law 7(2), 409–413.
148 F. KUTTY
Table 7.1 Summary of key Islamic finance instruments
Arabic name of the financial instrument Summary
Murabahah Cost plus mark up/rent to own type of
arrangement
Ijarah Financial lease
Mudharabah Profit/loss sharing contract
Musharaka Partnership with profit/loss sharing
Istisna Agreement to deliver a product or service
at a time in future at an agreed price
Takaful Mutual benefit society to pool and share
risks
Sukuk Bond like investment certificate that
converts into equity
holding the assets that are then leased back to the original company for
an asset-related return over a predetermined period of time based upon
the profit from the underlying assets.76
Each of these products/structures have numerous variations and itera-
tions. There are many other products and instruments but the foregoing
provides a good overview of the field and should give one a sense of how
Islamic finance works. Table 7.1 provides a summary. The overview in this
Part should also help shed some light on the potential for differences of
opinion on the Shari’ah-compliance of the different products and vehi-
cles. It also reveals the potential for confusion, misunderstanding, and
even obfuscation and deception by unscrupulous actors who may wish
to exploit religious sentiments. The next Part touches upon challenges,
especially consumer protection concerns, that evolve from the status quo.
Practical Issues in Implementing Islamic Finance
While, at least theoretically, Islamic finance has much to offer with regard
to economic and social justice, financial management, and ethics, the
Islamic finance industry of today faces significant challenges, especially
outside the Muslim world. Some of these issues are germane in Muslim
states, too, but they are more pronounced or unique to jurisdictions that
do not have an overarching Islamic judicial or regulatory body.
76 Ibid. at 424.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 149
These challenges include the following: (1) lack of knowledge and
sophistication on the part of Muslim consumers and the non-existence
of uniform standards; (2) shortage of experts with an understanding of
Islamic rules, finance, law, and their interactions; (3) lack of sophistica-
tion, professionalism, and the resulting lack of credibility; (4) legal imped-
iments, regulatory confusion, and lack of oversight; and (5) politics and
public opinion. A few of these issues are highlighted below to provide an
overview.
Lack of Knowledge on the Part of Muslim
Consumers and the Non-existence
of Uniform Standards
Far too many consumers lack basic knowledge about finance and finan-
cial risk and may make unwise financial decisions. They may also be easily
duped by fraudsters and high-powered salespeople. This is the main rea-
son that governments often have extensive rules and regulations when it
comes to investments and financial schemes. This is true for all money
matters, but as the foregoing discussion on Islamic finance illustrates, the
situation can be even more complex when there is a marriage between
finance and faith.77
Mahmoud Amin El-Gamal, a leading critic of the Islamic finance indus-
try, argues that the industry is selling overpriced products to the reli-
giously naive. He claims that sophisticated investors and the ultraortho-
dox religious players will see through what is being done in the name of
Islamic finance, but he notes, “So you’re left with the gullible who don’t
really understand the structure.”78 This is all the more dangerous when
the faith is blind as is the case too many times when religious followers
put their trust in pious and charismatic individuals or groups who use
religion to advance their agendas including financial ones.79
77 “A Study of Retail Islamic Banking: The Relationship between Customer Knowledge
and Service Quality,” Khairul Firdaus Adrutdin#1, Azlan Ali*2, Jimisiah Jaafar#3, Sallaudin
Hassan#4 Nur Syafiqah A. Rahim#5 http://ojs.excelingtech.co.uk/index.php/IJSCM/
article/view/1194.
78 Marais, Richard. 2007. “Don’t Call It Interest.” Forbes,https://www.forbes.com/
forbes/2007/0723/122.html#242132b74354.
79 Here is an example of an article in a Muslim publication which
essentially regurgitates what ijara, an Islamic finance company, says they
150 F. KUTTY
Professor El-Gamal may be giving the ultraorthodox Muslims too
much credit, because from my experience working with Islamic finance
products, most Muslims, even the ultraorthodox, have a very limited or
cursory understanding of Islamic finance in practice. The key questions
are: (1) how do we get religious consumers to be more inquisitive, and
(2) how do we get them to do more due diligence: This is particularly
important given that consumer protection legislation in this context is
virtually non-existent or deficient. The problem is heightened in non-
Muslim jurisdictions because of a lack of awareness as to what is being
done in the name of Islamic finance and the reluctance on the part of
governments to intervene in a community’s internal religious questions.
Muslim jurisdictions are not immune either. Many of them are relatively
unsophisticated in terms of consumer protection and lack the ability to
effectively dictate what is or is not Shari’ah-compliant, because that is
the realm of the religious establishment (many of whom are independent
and/or unregulated by the state) for the most part.
Those who actually study Islamic finance will quickly realize that one
of the central and highly debatable questions in Islamic finance is whether
Islamic financial institutions actually avoid interest-based instruments, or
simply reframe or relabel them in order to “comply” with Islamic law.80
In Partnership, Equity-Financing and Islamic Finance: Whither Profit-Loss
Sharing? Mohammad Omar Farooq argues that in order to attempt to
avoid interest, Islamic finance has developed “an impressive array” of
transactional modes that claim to be based on profit-loss-sharing (PLS).81
However, while the Islamic finance literature “continues to emphasize
PLS as the main modes, in practice Islamic financial institutions (IFIs)
are doing: https://muslimlink.ca/islamic-finance/ijara-cdc-islamic-halal-mortgage-home-
financing-canada-how-does-it-work. At the bottom it indicates that it is a paid advertise-
ment but most readers will not even get to that part. In practice, the structure through
ijara is not different from a conventional loan with the caveats as noted below in the
discussion in 2 below on UM Financial.
80 Farooq, Mohammad Omar. 2007. “Stipulation of Excess in Understanding and Mis-
understanding Riba: The Al-Jassas Link.” Arab Law Quarterly 21(4), 285–316.
El-Gamal, Mahmoud A. 2003. “‘Interest’ and the Paradox of Contemporary Islamic
Law and Finance.” Fordham International Law Journal 27(1), Article 6, https://pdfs.
semanticscholar.org/8cb7/0cc8baaf911ad52f932205a1722f76e3f049.pdf.
81 Farooq, Mohammad Omar. 2007. “Partnership, Equity-Financing and Islamic
Finance: Whither Profit-Loss Sharing.” Review of Islamic Economics 11, 67 at 67–68.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 151
have deliberately and systematically avoided them.”82 Farooq goes on
to argue that partnership modes of business organization, such as PLS,
are inherently flawed, and that it is thus economically rational for Islamic
financial institutions to use debt-like instruments while claiming compli-
ance with Islamic law under the guise of PLS-like equity-based systems.83
Meanwhile, in practice, instead of PLS systems, Islamic finance has turned
toward the murabahah, a model that often carries no risk for the Islamic
finance institution, despite risk-sharing being one of the key conceptual
components of Islamic finance.84 The mark-up model of the murabahah
leaves all the risk on the buyer, except in the case of death or default,
similar to conventional finance.85 While “Islamically there is nothing
wrong with murabahah,” there is also “nothing especially Islamic about
it, either … Banking primarily based on this type of transactions robs
IFIs of distinctively Islamic characteristics.”86 Murabahah is ultimately
not as Shari’ah-compliant as is generally claimed, and it is criticized by
many scholars as well as some Islamic Financial institutions.87 This leads
to a “basic contradiction.” where the PLS models continue to dominate
the literature; yet, in practice, IFIs continue to use murabahah and other
modes that are functionally non-PLS and similar to conventional financial
instruments.88 While IFIs “proclaim that the conventional financing
based on interest is unjust since there is no fair sharing of profit-loss and
risk,” they themselves “do not utilize PLS modes substantively in their
portfolios.”89 Farooq goes so far as to suggest that IFIs “make up ruses”
to “manufacture products and services that are only legally Islamic,”
82 Ibid. at 68; Dar, Humayon A. and Presley, John R. 2000. “Lack of Profit Loss
Sharing in Islamic Banking: Management and Control Imbalances.” International Journal
of Islamic Financial Services 2(2), 3–18.
83 Ibid. Warde, Ibrahim. 1999. “The Revitalization of Islamic Profit-and-Loss Sharing.”
Proceedings of the Third Harvard University Forum on Islamic Finance: Local Challenges,
Global Opportunities. Cambridge, MA: Center for Middle Eastern Studies, Harvard Uni-
versity. 199–211, http://ifpprogram.com/login/view_pdf/?file=The%20Revitalization%
20of%20Islamic%20Profit-and-loss%20Sharing.pdf&type=Project_Publication.
84 Ibid. at 70.
85 Ibid. at 71.
86 Ibid. at 72.
87 Ibid. at 73.
88 Ibid. at 74.
89 Ibid. at 85.
152 F. KUTTY
but have little difference in substance from conventional financial instru-
ments.90 Farooq is not the only one or the first to make such claims.91
This gap between the theoretical discourse and the practice of IFIs
may be due to an exaggeration of the “usefulness” of PLS models.92
This exaggeration, in turn, may stem from a second fundamental issue
within Islamic finance: the definition of riba. Specifically, the notion that
riba, which is prohibited in Islam, is broadly equivalent to interest. While
the traditional understanding of Muslims is that riba is equivalent to any
interest, some scholars, such as Farooq, El-Gamal, Kuran, Rauf, and oth-
ers argue that it only means “usury would be prohibited” but that “inter-
est in all its forms as it exists in modern economy and finance can’t be nec-
essarily categorized as prohibited.”93 While the Quran does not explicitly
define riba, the common understanding is that the traditional definition
is arrived at via six hadiths. In an analysis of these hadiths, Farooq finds
that it is a “daunting task” to utilize these hadiths to broaden riba’s scope
“to contend that all forms of interest … in a modern economy are pro-
hibited.”94 Should the common understanding of riba be modified to a
more narrow understanding of interest, IFIs would have more flexibility
in the types of financial instruments they could offer. Moreover, even if
one is to accept the traditional view of riba, consumers should be aware
that there are differences of opinion on this issue.
The differences in interpretation of riba are not only being advanced
by “modernists” or “liberals.” Even a group of conservative jurists passed
90 Ibid. at 86.
91 El-Gamal, Mahmoud A. 2003. “‘Interest’ and the Paradox of Contemporary Islamic
Law and Finance.” Fordham International Law Journal 27(1), Article 6, https://pdfs.
semanticscholar.org/8cb7/0cc8baaf911ad52f932205a1722f76e3f049.pdf; Kuran, Timur.
2004. Islam and Mammon: The Economic Predicaments of Islamism. Princeton: Princeton
University Press; Hamoudi, Haider Ala. 2006. “Muhammad’s Social Justice or Muslim
Cant?: Langdellianism and the Failures of Islamic Finance.” Cornell International Law
Journal 40(1), Columbia Public Law Research Paper No. 06-116.
92 Dar, Humayon A. and Presley, John R. 2000. “Lack of Profit Loss Sharing in Islamic
Banking: Management and Control Imbalances.” International Journal of Islamic Finan-
cial Services 2(2), 3–18.
93 Farooq, Mohammad Omar. 2009. “Riba, Interest and six Hadiths: Do We Have a
Definition or a Conundrum?” Review of Islamic Economics 13(1), 105, 107.
Azhar, Rauf. November 15, 2009. Economies of an Islamic Economy, Themes in Islamic
Studies,Vol.6,https://doi.org/10.1163/ej.9789004179370.i-470.
94 Farooq, Mohammad Omar. 2009. “Riba, Interest and six Hadiths: Do We Have a
Definition or a Conundrum?” Review of Islamic Economics 13(1), 138.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 153
afatwa permitting interest-based transactions as a necessity in the West
given the lack of viable alternatives and the importance of acquiring a
residence as a foundation for economic empowerment.95 They did by
inference add a few caveats, including the following: (1) there must be
no viable and practical Islamic alternative available; (2) the house to be
purchased must be for the buyer and his household; (3) the buyer must
not have another house; (4) the buyer must not have any surplus of assets
that can help him buy a house by means other than mortgage, and (5)
the buyer must be actively working for or seeking out Sharia’h-compliant
options.96
Another issue is the lack of uniform standards within a regulatory
framework, creating large differences in practices and variations in instru-
ments that all pass as “Shari’ah-compliant.”97 What is and what is not
Shari’ah-compliant differs widely depending on the school of jurispru-
dence and the geographic area—and even within these domains, because
each scholar’s opinion is considered valid by his or her respective follow-
ers.98 There is no official clergy or central religious authority (at least in
the Sunni context) that can be called upon to give the final word on what
is Islamic finance or even Islamic law.
95 European Council for Ifta’ and Research and the Conference of the League of Shar-
i’ah Scholars of North America, “Permissibility of Conventional Mortgage Under Neces-
sity.” Fourth Ordinary Session (October 27–31, 1999) Resolution 2/4, https://eshaykh.
com/halal_haram/permissibility-of-conventional-mortgage-under-necessity/ and http://
www.islamicmortgages.co.uk/index.php?id=259.
96 Ibid. For a rebuttal, see Salah al-Sawi. June 21, 2001. A Polite Reconsideration of the
Fatwa Permitting Interest-Based Mortgages for Buying Homes in Western Societies,trans-
lated by Usama Hasan, https://unity1.files.wordpress.com/2009/06/analysis-of-fatwas-
on-mortgages.pdf.
97 Wafik, Grais and Pellegrini, Matteo. 2006. Corporate Governance and Shariah Com-
pliance in Institutions Offering Islamic Financial Services. World Bank Policy Research
Working Paper No. 4054; Stubing, Darren. 2015. “Islamic Finance Held Back by Lack of
Supervision, Liquidity.” Global Finance,https://www.gfmag.com/magazine/may-2015/
lack-supervision-liquidity-holding-back-islamic-finance.
98 Pock, Alexander. 2007. Strategic Management in Islamic Finance. Berlin: Springer
Science & Business Media; Farook, Sayd Zubair and Farooq, Mohammad Omar.
2013. “Shariah Governance, Expertise and Profession: Educational Challenges in Islamic
Finance.” ISRA International Journal of Islamic Finance 5(1), 137–160; Box, Tamara
and Asaria, Mohammed. 2005. “Islamic Finance Market Turns to Securitization.” Inter-
national Financial Law Review 24, 21.
154 F. KUTTY
Different countries and different sects—and even schools of Islamic
thought within those countries and sects—each have their own interpre-
tation of religious as well as financial teachings of Islam. Contrary to
popular perception, Islamic law is not monolithic. Rather, it is pluralis-
tic and dynamic and, therefore, allows for flexibility to meet the demands
of the changing social and economic circumstances, but it also creates
obvious obstacles from a legal/regulatory and practical perspective. In
the absence of a supreme authority (e.g., the highest court in jurisdic-
tion for instance) with the power to rule on whether something is ulti-
mately Shari’ah-compliant, the rules may be unpredictable and susceptible
to a multitude of interpretations that result in “fatwa shopping.” Inter-
estingly, some scholars and critics have highlighted this practice, whereby
Islamic finance bodies search out “Islamic” legal opinions to justify or
rationalize what they want to do rather than seeking out the most reli-
able or “authentic” rulings in line with the spirit and letter of Islam.99
In fact, studies have demonstrated that some Islamic finance professionals
search for favorable scholars for quick recognition of products100 thereby
giving an Islamic identity to products that are de facto conventional in
nature.101
Education and reflection are critically important but highly unlikely
to bear any immediate fruit because of the complexity of the field and
the belief among many Muslims that they simply need to have good
intentions and should leave the mechanics to “scholars.” The fact that
unscrupulous actors may take advantage of them is brushed off: “My
intentions are good, if they want to dupe me then they will face God
on the day of judgement.”102 Although an understandable theological
position, this fatalistic view is fertile ground for exploitation.
99 Oseni, Umar A., Ahmad, Abu Umar Faruq, and Hassan, M. Kabir. 2016. “The Legal
Implications of ‘Fatw¯a Shopping’ in the Islamic Finance Industry.” Arab Law Quarterly
30(2), 102–137.
100 Hassan, M.K. and Dicle, M.F. 2007. “Basel II and Corporate Governance in Islamic
Banks.”inS.N.Ali(ed.),Integrating Islamic Finance into the Mainstream: Regulation,
Standardization and Transparency. Cambridge, MA: Islamic Finance Project, Harvard
Law School, 2007, 31–50.
101 Khan, F. 2010. How “‘Islamic’ Is Islamic Banking?” Journal of Economic Behavior
& Organization 76(3), 818.
102 This is a typical conversation with clients when reviewing the obfuscation used by
some Islamic finance entities.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 155
Shortage of Experts with Simultaneous
Understanding of Islamic Rules, Finance and Law
The dearth of competent specialists trained in the field is a widely high-
lighted global problem in Islamic finance.103 Many have argued that there
is a lack of human capital with Islamic finance know-how.104 Isuspect
the problem is not a shortage of Islamic scholars with know-how about
Islamic finance, because this is not necessarily accurate.105 As Zulkifli
Hasan notes, there are plenty of scholars with Islamic finance knowledge,
but institutions stick with a known group for credibility and business rea-
sons. I would also add that some are relied on because companies get
what they want from these Shari’ah scholars who are paid handsomely
and some of whom sit on dozens of boards.106 Sometimes the problem
is exacerbated even when people have Islamic finance training or knowl-
edge, because they do not appreciate or understand the whole picture.
This results in approval of documents, instruments, or structures that are
no different from conventional finance options, and sometimes it even
results in these scholars or specialists being used to market exploitative
or egregiously non-Shari’ah-compliant products and services. Scholars or
specialists who lack a more holistic understanding or who fail to appreciate
the technical and complex interplay often involved in such documents or
transactions are sometimes inadvertently duped by shady businesspeople
or occasionally even well-meaning proponents of Islamic finance.107
103 Abbas, Mohammed. February 2, 2008. “Shortage of Scholars Troubles Islamic
Banking.” The New York Times,https://www.nytimes.com/2008/01/22/business/
worldbusiness/22iht-bank.4.9412578.html; Barreh, Ismail. “Scholar Shortage Threatens
Islamic financing industry.” MuslimLink,https://muslimlink.ca/islamic-finance/scholar-
shortage-threatens-islamic-financing-industry.
104 Ibid.
105 Hasan, Zulkifli. 2012. “Demystifying the Myth of Shortage of Shari’ah
Scholars,” https://zulkiflihasan.wordpress.com/2012/03/02/demystifying-the-myth-of-
shortage-of-shariah-scholars-2/.
106 Inevitably when small cliques dominate and monopolize an industry and money is
involved, it is only a matter of time before problems start. See Barreh, Ismail. “Scholar
Shortage Threatens Islamic Financing Industry.” MuslimLink,https://muslimlink.ca/
islamic-finance/scholar-shortage-threatens-islamic-financing-industry.
107 Ha, Tu Thanh. 2014. “RCMP Charge Missing Toronto Financier with $4.3-
Million Mortgage Fraud.” The Globe and Mail,https://www.theglobeandmail.com/
news/national/rcmp-charge-missing-toronto-financier-with-43-million-mortgage-fraud/
article16972349/; Seputis, Jasmine. 2018. “2 Men Defrauded Shariah-Compliant
156 F. KUTTY
In the Canadian context, I have witnessed many schemes being
approved as Shari’ah-compliant, such as the “musharakah” agreement
used by UM Financial mentioned earlier, when financial institutions are
doing nothing more than relabeling, playing with terminology, and draft-
ing parallel documents. In such contracts, even though terminology from
Islamic finance is widely used, the key thing is that (1) the borrowers may
not fully realize that they are effectively paying “interest” on the loan,
because it might be labeled otherwise, and (2) there is a range of opinion
among Islamic finance scholars about what products/services are consis-
tent with Islamic principles.
With such contracts, an Islamic scholar who only understood the rules
of theoretical Islamic finance would not be able to understand these trans-
actions. The scholar must understand the theory of Islamic finance, the
practical details, and the conventional loan procedures, as well as the
legal and real estate practice and procedures. Such people are few and
far between.108
Lack of Professionalism
and the Resulting Lack of Credibility
Though there are some studies focusing on customer satisfaction with
Islamic finance companies in the Muslim world, there appear to be no
such studies in the context of Islamic finance companies in the West.
Anecdotally, the customer service landscape in the western Islamic finance
market is far from glowing. As small-time operators or community-based
groups, customer service is usually not their forte. The disgruntled client,
whose story I shared at the start of this chapter, only went to the Law
Society because he thought I was part of UM. Moreover, he had been
Mortgage-Holders of Millions of Dollars, Crown Tells Trial.” CBC News,https://www.
cbc.ca/news/canada/toronto/2-men-defrauded-shariah-compliant-mortgage-holders-
of-millions-of-dollars-crown-tells-trial-1.4867083; Sweeney, Annie. March 28, 2011.
“Guilty Plea in Fraud Scheme That Targeted Muslim community.” The Chicago Tribune,
https://www.chicagotribune.com/news/ct-xpm-2011-03-28-ct-met-muslim-fraud-guilty-
20110328-story.html.
108 I have carried out what I call the “coke” v. “pepsi” equivalent test (“conventional
mortgage” v. “Islamic Finance” test) on some Islamic scholars who have given opinions
on Islamic finance products, and they were not able to differentiate between the two. In
fact, in at least two cases, the scholars chose the “conventional” as more “fair,” “just,”
“reasonable,” “more affordable,” and “less exploitative.”
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 157
unable to get a satisfactory response from UM on his questions or com-
plaints even after months of trying. He found it difficult to reach UM
and when he did, they were unresponsive. UM is not alone in lacking
professionalism and sophistication. As small, independent, private, and
non-mainstream, Islamic finance entities cannot be expected to meet the
service levels people have grown to expect from conventional financial
institutions. Much of this has to do with limitations in terms of financial
resources, human resources, and, to some extent, even cultural factors.
This of course creates a vicious circle that results in even poorer service
over time and lowered expectations.
Given that the competitive advantage of Islamic banking lies in the
fact that the products and services offered are indeed Shari’ah-compliant,
some of the practices described earlier in this chapter diminish public faith
in Islamic finance companies. While Islamic financial institutions usually
have internal boards to verify that their products comply with Islamic
principles, this approach “gave rise to conflicting rulings and products of
Islamic banking that confused clients and investors,” notes a 2017 state-
ment by the Accounting and Auditing Organisation for Islamic Financial
Institutions (AAOIFI). “If the confusion persists, the credibility of Islamic
banking and finance as a whole may be jeopardized.”109 Consumer con-
fidence is also impacted significantly when there are damaging reports,
such as UM going into receivership or its principals being charged with
criminal fraud.
The situation will not improve until Islamic financial institutions take
concrete steps to implement standards. The Islamic banking world has
increased its efforts to standardize regulation and supervision. The Islamic
Development Bank is playing a key role in developing internationally
acceptable standards and procedures for strengthening the sector’s archi-
tecture in different countries. Moreover, international organizations, such
as the AAOIFI, the Islamic Finance Service Board (IFSB), the Interna-
tional Islamic Financial Market, the Liquidity Management Center, and
the International Islamic Rating Agency, are working to set Shari’ah-
compliant standards and harmonize them across countries.110 However,
despite the efforts of these international organizations to place the Islamic
109 Domat, Chloe. 2018. “Towards Standards in Islamic Finance.” Global Finance,
https://www.gfmag.com/magazine/march-2018/toward-global-islamic-finance-standard.
110 El Qorchi, Mohammed. 2005. “Islamic Finance Gears Up.” Finance and Develop-
ment 42(4), 46.
158 F. KUTTY
finance industry on a sound footing, “there are no generally acceptable
guidelines or standards on accounting, auditing, legal, governance, and
Shari’ah issues as yet.”111 Moreover, the problem is even worse in non-
Muslim jurisdictions for obvious reasons.
Unsurprisingly the fragmented regulatory structure of Islamic finance
has attracted criticism. Academics and practitioners alike have argued that
the lack of standardization of Shari’ah rules creates problems of consis-
tency, predictability, and fairness. Several commentators have argued that
such a fragmented regulatory structure hinders the success and advance-
ment of Islamic finance, and it also reinforces consumer protection con-
cerns as well as consumer confidence.112
In addition to issues of expertise, the absence of holistic and interdisci-
plinary knowledge, the lack of standardization as well as the potential con-
flict of certifiers serving as regulators, and of course “fatwa shopping” are
problematic for the practice of Islamic finance. This is all the more dan-
gerous given that some of these same scholars are also serving as auditors,
standard setters, legislators, and regulators.
Legal Impediments, Regulatory
Confusion and Lack of Oversight
There are currently two predominant types of regulator y regimes govern-
ing Shari’ah-compliant institutions in Muslim countries. One approach
111 Oseni, Umar A., Ahmad, Abu Umar Faruq, and Hassan, M. Kabir. 2016. “The
Legal Implications of ‘Fatw¯a Shopping’ in the Islamic Finance Industry.” Arab Law Quar-
terly 30(2) 107–137 at 108.
112 See Balz, Kilian, 2007. “Islamic Finance for European Muslims: The Diversity Man-
agement of Shari’ah-Compliant Transactions.” Chicago Journal of International Law 7(2),
551.
Intervention by a centralized regulator is essential in a competitive environment to
induce Islamic banks to formulate Shariah-compliant financial products. The regulator
fixes a structural threshold below which any financial product like Murabaha becomes
non-Shariah-compliant. The actual structure of the financial product developed by an
Islamic bank is unobserved by the regulator. It only becomes known in the event of an
audit conducted by the regulator (the article below by Azmat et al.…).
Azmat, Saad, Azad, A.S.M. Sohel, Ghaffar, Hamza, and Bhatti, Ishaq. 2015. “Why
Interest Free Islamic Banking Is Not Free from Interest?” https://www.deakin.edu.au/_
_data/assets/pdf_file/0003/392295/islamic-banking-not-free-from-interest-Azmat-Azad-
Ghaffar-and-Bhatti.pdf; Wilson, Rodney. 2004. Capital Flight Through Islamic Managed
Funds. Edinburgh: Edinburgh University Press.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 159
places Islamic institutions under the central bank, but in a regime entirely
different from that of the conventional banks.113 A second practice rec-
ognizes the uniqueness of the Islamic institutions but places them under
the same supervision and regulatory regime that governs conventional
banks, with slight modifications and special guidelines.114 In Canada and
the United States, similar to most non-Muslim countries, the industry
is governed by a regulatory and supervisory framework developed for
conventional finance with no consideration for the uniqueness of Islamic
financial institutions.115 Therefore, the regulatory regime does not take
into account the special nature of Islamic finance, which creates several
compliance issues for Islamic financial institutions.116
One of the biggest challenges to the development of Islamic finance in
Canada and the United States is the difficulty for new institutions getting
through the application process to receive a banking license.117 Even if an
Islamic bank was to get licensed, the restrictions on real estate ownership
would obviously be an issue for Islamic-financial institutions, especially
if the Islamic finance company wishes to structure “pure” Islamic mod-
els.118 According to the majority opinion, the Islamic institution must
hold legal title until the process is complete. Banking laws may also restrict
non-real estate investments, limiting them to fixed-income and interest-
bearing securities, which are deemed prohibited by most proponents of
Islamic finance.
113 (Example, Yemen and Malayisa). El Qorchi, Mohammed. 2005. “Islamic Finance
Gears Up.” Finance and Development 42(4), 46.
114 (Example, Bahrain and Qatar). Ibid.
115 Islamic Finance: Opportunities, Challenges, and Policy Options, International Mon-
etary Fund.
116 Canada Islamic Finance Outlook 2016. Toronto Financial Service Alliance,IFSB
Working Paper on Financial Consumer Protection In Islamic Finance.
Nienhaus, Volker. 2015. “IFSB Working Paper on Financial Consumer Protection in
Islamic Finance. IFSB Working Paper Series.” Islamic Financial Services Board, https://
www.ifsb.org/docs/WP-03-Consumer%20Protection(final).pdf.
117 http://dtpr.lib.athabascau.ca/action/download.php?filename=mba-11/open/
edwardlauraProject.pdf.
118 In order to structure a house purchase transaction, for instance, the title will have
to remain in the name of the Islamic finance company (either solely or jointly) until the
transaction is completed.
160 F. KUTTY
Taxes pose another challenge.119 Sharia-compliant products gener-
ally do not fit within the definitions that currently govern the conven-
tional financial products, despite their similar economic features. Both
tax authorities and taxpayers lack knowledge of the specific features of
Islamic products. Considering the technical, interpretive, and policy-
related issues, obtaining rulings from the relevant authorities can be quite
lengthy and costly.120 One glaring tax issue in the context of real property
is land transfer.121 Institutions that purchase a home and then resell it to
the final purchaser may face, in addition to other issues, double or even
triple transfer tax costs depending on the transaction and the jurisdiction.
Some jurisdictions may have worked around it, but it remains a problem
in other jurisdictions.122 For instance, in Ontario where the Islamic Co-
operative Housing Corporation and Ansar Co-operative Housing Cor-
poration (hereinafter collectively the Co-op) purchase homes for people
and keep the title until the Co-op’s contribution is paid off, the Min-
istry of Finance initially did not concern itself with collecting taxes on
subsequent transfers. After years of not making it an issue, the Ministry
then started reassessing homeowners thousands of dollars in taxes. They
took the position that land transfer taxes were payable when the house
was initially purchased and again when title is transferred to the actual
homeowner. Following meetings with Ministry officials where they were
briefed on the structure of the home purchase model, the Ministry ten-
tatively suspended this practice, but there is still no definitive ruling on
119 Canada Islamic Finance Outlook 2016. Toronto Financial Service Alliance.
120 For details, see Islamic Finance Working Group. 2010. Toronto Financial Ser-
vice Alliance. Retrieved from http://www.tfsa.ca/resources/pdf/TFSA_IFWG_Prelim_
Report_May14_2010_final_2.pdf.
121 Land Transfer Tax or Stand Duty Land Tax or Real Estate Transfer Tax
are taxes payable on transfers of real properties. There are some exemptions. See,
for example, https://www.fin.gov.on.ca/en/tax/ltt/;https://www.gov.uk/stamp-duty-
land-tax;https://www.nar.realtor/smart_growth.nsf/docfiles/transfertaxrates(8-05).pdf/
$file/transfertaxrates(8-05).pdf.
122 Islamic finance/alternative finance arrangements and tax—overview, https://www.
lexisnexis.com/uk/lexispsl/tax/document/393773/5BR0-C761-F18C-V2DB-00000-
00/Islamic_finance_alternative_finance_arrangements_and_tax_overview.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 161
this despite waiting more than ten years.123 This obviously creates uncer-
tainty for the thousands of homeowners who can be reassessed at any
point within a certain limitation period.
Another potential issue that may arise is the loss of rebates or credits
on property and other tax implications.124 The wide variety of the Islamic
financial products may alone create the need for significant resources to
approach the tax authorities. The interplay and interaction between fed-
eral and state/provincial laws, regulations, and policies may raise even
more complexities for Islamic finance companies.125
Lastly, as touched upon earlier in this chapter, the non-existence of
oversight or regulatory bodies in the Islamic context adds to the complex-
ity. At least in Muslim countries some steps are being taken to address this
issue. The Bahrain-based AAOIFI is working toward establishing world-
wide norms and standards for Islamic finance and banking practices. The
AAOIFI, with hundreds of member institutions across forty-five coun-
tries, has adopted guidelines to centralize these boards and introduce new
standards. Its standards are already widely used within the Islamic finance
industry, and are compulsory in some countries.126 The fact remains that
there are no such standards or regulatory bodies that can oversee them
in non-Muslim jurisdictions. This makes it difficult to engage with main-
stream authorities in working around regulations, laws, policies, etc.
123 I met with Ministry of Finance officials on behalf of the Islamic Co-operative Hous-
ing Corporation/Ansar Co-operative Housing Corporation.
124 Some jurisdictions provide property tax relief for residential properties, and some
jurisdictions provide relief or rebates from other types of taxes, both of which may not
be smoothly accessed when transactions are structured in accordance with Islamic finance
rules. I have seen issues with tax authorities that question why a corporation is applying for
tax relief for a residential home or how a corporation can claim to reside in a residential
property, etc. These issues come about because ownership rests with the institution and
other structural factors.
125 See, for example, http://www.woodllp.com/Publications/Articles/pdf/Taxation_
of_Islamic_Finance_Part_1.pdf;https://www.mohammedamin.com/Islamic_finance/
Euromoney-chapter-tax-treatment-of-Islamic-finance.html.
126 Domat, Chloe. 2018. “Towards Standards in Islamic Finance.” Global Finance,
https://www.gfmag.com/magazine/march-2018/toward-global-islamic-finance-standard.
162 F. KUTTY
Politics and Public Opinion
A more recent obstacle, which became exceedingly pronounced in the
wake of the tragic events of 9/11, is the false association that Islamic
finance is necessarily connected with terrorism, extremism, and even
money laundering.127 Some anti-Muslim activists have taken it upon
themselves to raise the alarm about Islamic finance being a back door
to introduce Shari’ah into Western lands.128 They are playing on the fear
of Shari’ah as it exists in the minds of far too many in this day and age.129
This is no exaggeration. Anti-Muslim activists are campaigning and lob-
bying governments to oppose any accommodation in the Islamic finance
context. During my meetings with the Ministry officials on the issue of
double land transfer tax on a behalf of my clients, the extent of the lobby-
ing became clear to me. In fact, for more than twenty years the Ministry
had no issue with how the transactions were structured, and they did not
expect land transfer tax a second time when a property was transferred
from the Islamic finance company to the homeowner. The Minister had
accepted the following:
1. that the property was initially purchased on behalf of the home-
owner;
2. that land transfer tax was paid when the property was acquired from
the seller;
3. that the Islamic finance institution was simply holding title as secu-
rity for the amount it had advanced toward the purchase; and
4. that the structure of the transaction was not to evade taxes but to
comply with religious requirements.
The Ministry all of sudden changed its view and started assessing land
transfer taxes on all transfers to owners. During the meeting it became
127 https://zulkiflihasan.wordpress.com/2009/12/30/another-sign-of-islamophobia/;
https://www.aa.com.tr/en/turkey/islamophobia-prevents-islamic-finance-expansion-
malaysian-scholar/219396.
128 https://www.theglobeandmail.com/news/national/banks-are-helping-sharia-make-
a-back-door-entrance/article1051161/.
129 https://www.nydailynews.com/opinion/silly-american-fear-sharia-law-article-1.
3229045;https://www.thestar.com/opinion/commentary/2017/02/20/factors-to-
consider-about-sharia-law-and-m103.html.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 163
clear that it had been lobbied by “people from the community” who
feared that allowing Islamic finance would legitimize Shari’ah and open
the doors to all that it supposedly means. This has been a theme advanced
by Islamophobes, including some self-proclaimed secular Muslims. I was
even asked a hypothetical by one of the attendees: would Muslims who
used conventional banks be labeled as apostates if Islamic institutions were
available. My answer, of course, was that both systems coexist in Muslim
countries and I have yet to hear of anyone being branded an apostate
for choosing conventional banking. Islamophobia is alive and well in the
Islamic finance context as well.
Contrary to some fear mongering, Islamic finance is not the lead char-
iot in “Islamization” and is not especially susceptible to money launder-
ing or terrorist financing.130 Yes, it can be abused, just as conventional
financing can. For the vast majority it is simply an exercise in attempt-
ing to integrate their faith into their financial dealings. Though theory
and practice diverge in the attempt to implement faith, this should not
detract from the idealism of those who seek to abide by it. It certainly
should not be seen as part of a conspiracy to spread Shari’ah or fund
terrorism.
Conclusion
Islamic finance, in theory, has much to offer to global finance, but its
current practice falls far short of Islamic economic and financial ideals.
As many scholars and practitioners have pointed out, Islamic finance as
it exists in practice today for the most part is a financial system: “charac-
terized by an incoherent web of rules, convenient and specific blindness
respecting those rules in particular contexts, and deceptive and obfusca-
tory measures intended to lend the entire affair a patina of legitimacy
as Islamic. Social justice and fairness are not significant components of
the system.”131 This unfortunate reality should not cloud the need for,
130 Terrell, Ron. (2007). “Islamic Banking: Financing Terrorism or Meeting Eco-
nomic Demand?” (thesis). Naval PostGraduate College, https://apps.dtic.mil/dtic/tr/
fulltext/u2/a475770.pdf;Seealsohttps://www.acamstoday.org/islamic-finance-money-
laundering-and-terrorist-financing/.
131 Hamoudi, Haider Ala. 2006. “Muhammad’s Social Justice or Muslim Cant?:
Langdellianism and the Failures of Islamic Finance.” Cornell International Law Journal
40(1), Columbia Public Law Research Paper No. 06-116.
164 F. KUTTY
and promise of, Islamic finance. What many critics do not realize is that
the instability of conventional, debt-based, finance has been criticized by
many Western scholars who are quite innocent of Islamic finance or of the
Shari’ah. Starting with Irving Fisher in the 1930s, many have noted how
a profit–loss sharing system would produce a more stable economic sys-
tem. Well-known economists, such as Willem H. Buiter,132 have argued
that the world has too much leverage and too little equity, while the ques-
tion posed by Luigi Zingales in his Presidential address to the American
Finance Association was “Does Finance benefit Society.”133 The alterna-
tive faith-based proposal of Islamic finance is to share both profits and
losses. As Timur Kuran, an unsympathetic observer, notes in the context
of Islamic finance in Egypt:
Having suggested that in its present form Islamic banking would not
solve any of Egypt’s pressing economic problems, let me acknowledge that
Islamic banks might bring benefits by abiding by their stated mode of
operation. The charters of Islamic banks instruct them to lend on the basis
of “profit and loss sharing” rather than for a fixed return.134
The concept of profit/loss sharing has broad appeal, even outside of
Islamic finance; Martin Weitzman135 of MIT, for example, has argued
for a sharing economy.
The glaring defect of Islamic finance as it exists is that the practical
implementation of profit/loss-sharing arrangements remains fairly lim-
ited. Furthermore, there seem to be no realistic prospects of a change
toward equity instead of debt. Even though the returns to equity
132 Buiter, Willem H. and Rahbari, Ebrahim, 2015. “Why Economists (and Economies)
Should Love Islamic Finance.” Journal of King Abdulaziz University: Islamic Economics
28(1). Retrieved from https://ssrn.com/abstract=3065269.
133 Zingales, L. 2015. “Does Finance Benefit Society?” Journal of Finance 70(4), 1327–
1363.
134 Worstall, Tim. March 16, 2013. “There’s Nothing Wrong With Islamic Finance as
Long as It Really Is Islamic Finance.” Forbes,https://www.forbes.com/sites/timworstall/
2013/03/16/theres-nothing-wrong-with-islamic-finance-as-long-as-it-really-is-islamic-
finance/#53e598cb3e2b.
135 Weitzman M.L., Kruse D.L. 1990. “Profit Sharing and Productivity.” In Blinder AS
Paying for Productivity: A Look at the Evidence. Washington, DC: Brookings Institution,
95–142.
7 ISLAMIC FINANCE, CONSUMER PROTECTION AND PUBLIC POLICY 165
(profit/loss-based) are clearly very much higher than that of bonds (inter-
est based) in the long-run, Islamic finance has simply not risen to the
challenge of realizing this long-run potential. This sloth is inexplicable in
view of the Quranic warning that usury will bring war upon those who
practice it:
O you who believe, fear Allah and give up what remains due to you of
interest if you are indeed believers. And if you do not, then be warned
of war (against you) by Allah and His Messenger, while if you repent you
shall have your capital. Do not do wrong and you shall not be wronged.
(Quran 2:278–279)
If the Islamic finance industry and government regulators address the
concerns and complaints made by a growing number of critics, includ-
ing former champions136 of the industry, then there is still hope that the
original ideals of Islam can provide a more equitable and stable economic
system. In this case, faith has not sufficiently guided finance.
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CHAPTER 8
Christianity and Inequality in the Modern
United States
Heath W. Carter
We are living through what many experts are calling a new Gilded Age,
an era that is nothing short of historic when it comes to inequality.1Its
contours can be measured in a variety of ways. Consider, for example,
that in 1973 the top 1% of American earners boasted just 9.2% of all
income. Today they command fully 21%. One has to go all the way back
to the late 1920s, just prior to the Great Depression, to find compara-
ble numbers.2But the nation’s wealth gap is arguably even more strik-
ing. An Institute for Policy Studies report found that, as of 2017, “the
1See, for example, Paul Krugman, “Why We’re in a New Gilded Age,” The
New York Times, 2014, available via https://www.nybooks.com/articles/2014/05/08/
thomas-piketty-new-gilded-age/ (accessed 7 August 2018); and Eric Posner and Glen
Weyl, “The Real Villain Behind Our New Gilded Age,” The New York Times, 2018, avail-
able via https://www.nytimes.com/2018/05/01/opinion/monopoly-power-new-gilded-
age.html (accessed 7 August 2018).
2See Estelle Sommeiller and Mark Price, “The New Gilded Age: Income Inequality
in the U.S. by State, Metropolitan Area, and County,” Economic Policy Institute, 2018,
available via https://www.epi.org/files/pdf/147963.pdf (accessed 7 August 2018).
H. W. Carter (B)
Princeton Theological Seminary, Princeton, NJ, USA
© The Author(s) 2020
T. Akram and S. Rashid (eds.), Faith, Finance, and Economy,
https://doi.org/10.1007/978- 3-030-38784-6_8
173
174 H. W. CARTER
three wealthiest Americans—Bill Gates, Jeff Bezos, and Warren Buffett—
owned more wealth than the entire bottom half of the American popula-
tion combined, a total of 160 million people or 63 million households.”3
One common response to such statistics is to stress their relativity: sure,
there may be a widening gap between rich and poor in the United States,
but even the poor here are rich by global standards. But this perspective
may lead some to underestimate the existence of real—and in some cases,
outright lethal—suffering right here in the land of plenty. In Chicago, life
expectancy varies by more than 15 years depending on one’s census tract,
with a range extending from 83.3 years on the Near North Side (where
household incomes exceed $77,000 per year) to just 68.2 years in West
Garfield Park (where household income is just under $24,000 per year).4
Between the extremes, wage stagnation is pervasive, with middle-income
workers’ real wages increasing only 0.2% per year over the last forty years,
even as low-wage workers have seen a 5% decline in their real wages over
the same period.5
Whatever the similarities between the days of Carnegie, Rockefeller,
and Vanderbilt and our own, there remains this fundamental difference:
late nineteenth-century Christians were less inclined to give inequality
their “amen.” In the face of the original Gilded Age’s notorious dis-
parities, ordinary believers built a variety of movements challenging the
deep structures of industrial capitalism, contributing in the process to
an unprecedented, nationwide ferment regarding the shape of a moral
economy. On this particular front the analogy to our time breaks down.
After all, the contemporary social movement most often identified with
these issues, Occupy Wall Street, enjoyed tepid support, at best, from the
nation’s churches, which is perhaps partly why it proved such a flash in the
pan. It left only a rhetorical flourish (the 1% vs. the 99%) in its wake—one
3Chuck Collins and Josh Hoxie, “Billionaire Bonanza: The Forbes 400 and the
Rest of Us,” Institute for Policy Studies, 2017, available via https://ips-dc.org/
wp-content/uploads/2017/11/BILLIONAIRE-BONANZA-2017-FinalV.pdf (accessed 7
August 2018).
4Bijou R. Hunt, Gary Tran, and Steve Whitman, “Life Expectancy Varies in Local
Communities in Chicago: Racial and Spatial Disparities and Correlates,” Journal of Racial
and Ethnic Health Disparities 2, no. 4 (December 2015): 425–433.
5Lawrence Mishel, Elise Gould, and Josh Bivens, “Wage Stagnation in Nine Charts,”
Economic Policy Institute, 6 January 2015, available via https://www.epi.org/files/
2013/wage-stagnation-in-nine-charts.pdf (accessed 7 August 2018).
8 CHRISTIANITY AND INEQUALITY IN THE MODERN UNITED STATES 175
that has failed to brighten the prospects of the labor movement, which
today enrolls only 6.5% of private sector workers.6
Spiraling inequality has many sources, of course, but in this essay I will
explore its spiritual roots. Historians of American Christianity have often
taken denominational and/or theological conflict as a central plotline,
crafting stories about rivalries between Baptists and Methodists, Protes-
tants and Catholics, fundamentalists and modernists, and so on.7These
stories are certainly revealing in their own right. But they often conceal
another central fault line in the history of modern American Christian-
ity, one that cuts straight through denominations and across theological
camps: namely, the moral status of inequality. For more than one hun-
dred and fifty years American Christians have been deeply divided about
not just the sources of inequality—whether it derives first and foremost
from individual failings or from social structures—but also about whether
faithful believers are obligated to join the fight against it. In this chapter
I will offer a brief overview of these battles from the first Gilded Age
to our own, tracing them through four distinct phases of development.
It will become clear that this struggle has often involved a tug-of-war
between church leaders and believers at the grassroots, with all parties
well aware that struggles over the meaning of Christianity for the modern
world have major implications not only for the churches but also for the
soul of the nation.
This chapter may also be read as a concise introduction to the his-
tory of social Christianity, a heterogeneous tradition which arose from
the grassroots in the nineteenth century and which reached the apex of its
influence in the mid-twentieth century. This tradition has at its core sev-
eral distinctive intuitions: (1) that inequality is sinful; (2) that the source
of inequality is, first and foremost, not within the individual but without,
in the systems and structures of society; and therefore; and (3) that Chris-
tian faith requires participation in fights for the reform and reconstruction
of unjust systems. Over the course of the hundred years stretching form
6“Union Members Summary,” Bureau of Labor Statistics, 19 January 2018, available
via https://www.bls.gov/news.release/pdf/union2.pdf (accessed 7 August 2018).
7This is especially characteristic of the grand narrative tradition pioneered by Robert
Baird, whose landmark 1844 book, Religion in America, or, An account of the origin,
progress, relation to the state, and present condition of the evangelical churches in the United
States: with notices of the unevangelical denominations divvied the nation’s churches into
“evangelical” and “unevangelical” camps.
176 H. W. CARTER
the end of the Civil War to the apex of the modern Civil Rights Move-
ment, a vast and diverse array of social Christians sought to vanquish
American inequality. They came as close as anyone ever has. Only when
they began to falter in the face of mighty headwinds did our new Gilded
Age come into view.
Phase One: Grassroots Uprisings, 1865--1900
The late nineteenth century was an age of stark contrasts: in the experi-
ences of rich and poor, to be sure, but also in the reactions of the institu-
tional churches and everyday Christians to the jaw-dropping inequality in
their midst. Across denominations, throughout these postbellum decades,
the clergy largely failed to champion structural solutions. The American
Catholic hierarchy proceeded cautiously in all social and political affairs.
While the Church’s numbers were growing exponentially, its position in
a broader society long prone to fits of anti-immigrant and anti-Catholic
sentiment remained tenuous. Priests, bishops, and especially nuns, poured
their resources into charitable endeavors during these years in a heroic
attempt to meet the needs of the faithful without causing too much of
astir.
8Meanwhile, their Protestant counterparts, who retained signifi-
cant cultural authority even in the wake of the theological crisis that was
the Civil War, tended to champion a classical liberalism that attributed
widespread poverty to the sins of the poor.9
Take, for example, the case of the Reverend David Swing, a nation-
ally renowned Presbyterian minister who is best remembered in American
religious history for his pathbreaking theological liberalism.10 In the early
1870s he was run out of the Presbyterian Church for his low view of
biblical authority and reinterpretation of historic Christian doctrines. But
during those same years, amid the rise of the modern labor movement,
8On the centrality of nuns in particular, see Suellen Hoy, Good Hearts: Catholic Sisters
in Chicago’s Past (Urbana: University of Illinois Press, 2006); and Maureen Fitzgerald,
Habits of Compassion: Irish Catholic Nuns and the Origins of New York’s Welfare System
(Urbana: University of Illinois Press, 2006).
9For more on the damage the Civil War wreaked on Protestant America, see Mark A.
Noll, The Civil War as a Theological Crisis (Chapel Hill: University of North Carolina
Press, 2006).
10 See, for example, William R. Hutchison, The Modernist Impulse in American Protes-
tantism (Durham: Duke University Press, 1976).
8 CHRISTIANITY AND INEQUALITY IN THE MODERN UNITED STATES 177
Swing made a name for himself as a staunch defender of laissez faire eco-
nomics. In 1874, amid one particularly severe economic downturn, Swing
declared in no uncertain terms, “The conflict between classes in the cities
of our country is not a conflict between labor and capital, but between
successful and unsuccessful lives.” In contrast with feudal Europe, the
United State was, in Swing’s estimation, a land of opportunity, one in
which the poor were without excuse. He went on:
The reason is the man who raves about the relief fund is not in as easy
circumstances as, for example, George Armour, is because he did not come
here thirty years ago, and heave trunks at a hotel and invest each ten dollars
in a town lot. The reason why Mr. Hoffman’s poor man is not wealthy as
Wirt Dexter is because he did not go to a country school as Dexter did,
and then bend down to twenty years of bondage at the law, studying cases
far into the night.
Holding fast to an important vein of antebellum conventional wisdom,
Swing went on to insist, “In our crisis the lesson taught the people should
not be that labor and capital are enemies, but that capital in this country
is labor. The rich man of today was the laborer of yesterday, and before
the poor man of today there lies the hope of a better future…[which will
come] by the old way of economy and industry and intelligence.”11
Countless ordinary believers begged to differ. During these same late
nineteenth-century decades a variety of faith-infused movements against
inequality sprung up at the grassroots. At least four deserve some men-
tion here. First, workers banded together in unions and labor federations,
which were also hotbeds of dissenting Christian theologies.12 Union lead-
ers such as Andrew Cameron fought not only for shorter hours and
higher wages, but also against the dominant strains of Christian economic
thought. Cameron, the editor of the nation’s most important labor paper
throughout the 1860s and 1870s, wrote in one issue, “It is a startling
fact that the modern pulpit has arrayed itself on the side of the oppres-
sor; has almost invariably defended the aggressions of the monied power;
and used its high and holy mission to pervert the ways of the Lord.”13
11 David Swing, “The Labor Turmoil,” Alliance 1, no. 4 (3 January 1874): 2.
12 See Heath W. Carter, Union Made: Working People and the Rise of Social Christianity
in Chicago (New York: Oxford University Press, 2015).
13 “Rev. Dr. Westwood,” Workingman’s Advocate 5, no. 27 (30 January 1869): 2.
178 H. W. CARTER
As harsh as these words were, they did not proceed from the pen of an
embittered outsider. Cameron was himself a believing Christian. While
cognizant of widespread associations between working-class protest and
godlessness, he denied any necessary link between the two. He declared
in one editorial, “Our fight is not against Christianity, but against those
who use it as a cloak to secure their selfish purposes,” and in another that
“the Gospel of Christ sustains [labor] in our every demand…the volume
of Divine inspiration is the rock of truth upon which our ‘pretensions’ are
founded.”14
Women often found themselves on the outside looking in at the early
labor movement, but as they gained ground within unions at the turn of
the century, they too mounted arguments regarding the Christian basis of
their activism. Agnes Nestor, a devout Catholic and leading figure within
the Women’s Trade Union League, took advantage of every available
opportunity to implore middle-class Christian audiences to join work-
ing women’s fight. To one particularly affluent congregation in Chicago’s
northern suburbs she declared, “You are so far removed from the life of
the factory girl that you cannot understand the view she takes of life.” In
Nestor’s view, this distance represented a shirking of Christian duty. She
went on, “It is the work of the church to take an active instead of passive
interest in the welfare of the mothers of to-morrow and lend its strength
toward a betterment of conditions.”15
A second grassroots movement sought to generate bonds of solidar-
ity and ameliorate abhorrent conditions in the nation’s industrializing
“shock cities.” With leading clergy largely paralyzed by the emergence
of sprawling communities of working-class immigrants in their midst,
middle-class women—who were themselves barred from the ministry—
took the lead in forging connections. Reformers such as Mary McDowell
and Jane Addams founded settlement houses in the poorest and most
environmentally degraded urban neighborhoods, eager to live out Jesus’s
command to love one’s neighbor as oneself. These houses soon became
hubs of community activism, where residents organized to fight for every-
thing from public baths, parks, and playgrounds to labor rights and wom-
en’s suffrage. McDowell had come of age in Evanston, Illinois—a center
14 “Christianity a Failure,” Workingman’s Advocate 4, no. 42 (9 May 1868): 2; and
“Liberal Christianity,” Workingman’s Advocate 4, no. 17 (16 November 1867): 2.
15 “In Factory Girl Plea; Piecework Is Scored,” Chicago Record-Herald, 5 September
1910.
8 CHRISTIANITY AND INEQUALITY IN THE MODERN UNITED STATES 179
for energetic Methodist reform, thanks in large part to the presence of
the Women’s Christian Temperance Union—and a strong Christian ide-
alism animated her four decades in Chicago’s stockyards district. Musing
as to why more believers did not jump so readily into the urban fray, she
reflected, “I sometimes have wondered whether or not Christians have a
consciousness of a present Christ – a God in the flesh – a ‘contemporary,’
who is with us in all our crudeness. Must I not see Him here back-of-
the-Stockyards – a living presence making the struggle of the individual
as well as of the group a sacred and holy thing?”16 McDowell was hardly
alone among settlement house workers in sensing the nearness of Christ
in poor neighborhoods. Addams traced their movement’s roots to “a cer-
tain renaissance going forward in Christianity. The impulse to share the
lives of the poor, the desire to make social service, irrespective of pro-
paganda, express the spirit of Christ, is as old as Christianity itself.” She
went on to say, “I believe that there is a distinct turning among some
young men and women toward this simple acceptance of Christ’s mes-
sage. They resent the assumption that Christianity is a set of ideas which
belong to the religious consciousness, whatever that may be. They insist
that it cannot be proclaimed and instituted apart from the social life of
the community and that it must seek a simple and natural expression in
the social organism itself.”17
On the other side of the Mason-Dixon line, meanwhile, a third grass-
roots movement took shape, as black freedom fighters sought to recon-
struct the postbellum South on a racially egalitarian democratic basis.
Black activists founded local chapters of the Union League and Repub-
lican Party across the region, while also establishing independent black
churches at a remarkable clip. These fledgling institutions, whose very
existence was a protest against the southern status quo ante, struggled
just to survive amid the white paramilitary counterinsurgency of the early
1870s and so it’s little surprise that black churches were not uniformly
committed to activism as a central outworking of Christian faith.18 But
16 Undated letter to Shailer Mathews, Mary McDowell Settlement records, Box 4,
Folder 21, Chicago History Museum, Chicago, IL.
17 Jane Addams, “The Subjective Necessity for Social Settlements,” in Philanthropy and
Social Progress (New York: Thomas Y. Crowell, 1893).
18 See Steven Hahn, A Nation Under Our Feet: Black Political Struggles in the Rural
South from Slavery to the Great Migration (Boston: Har vard University Press, 2003).
180 H. W. CARTER
a variety of streams of black Christian protest emerged despite immi-
nent threats to life and limb. There was a black nationalist incarnation,
embodied by African Methodist Episcopal (AME) bishop Henry McNeal
Turner, who already in the late nineteenth century was arguing “God is a
Negro.” A second stream reflected the philosophy of Booker T. Washing-
ton, whose message of incremental racial uplift through economic devel-
opment included an emphasis on the ethical dimensions of Christianity.
His most formidable rival was W. E. B. Du Bois, who advanced a vision
of a radical Jesus from outside the confines of the institutional church
and who helped to inspire other black social Christians. Like Du Bois,
Ida B. Wells rejected Washington’ strategy in favor of a more radical pol-
itics, even as she poured her energies into a courageous and peripatetic
anti-lynching campaign. Meanwhile, figures such as Nannie Burroughs
and Adam Clayton Powell, Sr., mediated between Washington and Du
Bois, modeling an approach that fused their best insights. Collectively,
their struggle against a heinous Jim Crow order would prepare the way
for civil rights activists to come.19
Finally, in parts of both the South and West, farmers joined together,
sometimes even across racial lines, to power a fourth set of grassroots
movements challenging the power of the nation’s ruling elite. From the
Grange and the Farmers’ Alliance to the People’s Party, their organi-
zations were suffused with Christian ideas and powered by Christian
activists who mounted a fierce assault on the monied powers of Wall
Street. Expressing a “righteous indignation” at the ways that a compla-
cent “churchianity” underwrote elite rule, they threw their weight behind
a Populist movement that briefly gained national prominence in the early
1890s before flaming out and taking with it hopes for a progressive bira-
cial political coalition.20 Their concerns found an enduring advocate in
the person of William Jennings Bryan, an evangelical Christian and three-
time presidential candidate, who declared in a legendary 1896 speech at
the Democratic National Convention, “we shall answer their demands
for a gold standard by saying to them, you shall not press down upon the
19 Gary Dorrien, The New Abolition: W. E. B. Du Bois and the Black Social Gospel (New
Haven: Yale University Press, 2015).
20 Joe Creech, Righteous Indignation: Religion and the Populist Revolution (Urbana:
University of Illinois Press, 2006).
8 CHRISTIANITY AND INEQUALITY IN THE MODERN UNITED STATES 181
brow of labor this crown of thorns. You shall not crucify mankind upon
a cross of gold.”21
Phase Two: Institutional Breakthroughs, 1900--1935
By the early twentieth century, the nation’s sundry industrial crises and
the intentional pressure exerted by these grassroots movements had gen-
erated a serious crisis for the leaders of the nation’s Christian institutions:
if they did not embrace a more egalitarian gospel—and fast—it appeared
they might soon forfeit their credibility with ordinary people. Venerable
dreams of “Christian America” seemed suddenly imperiled. These anxi-
eties empowered scattered reformers on the inside, who systematized and
popularized social Christian ideas, hoping to capture the hearts of their
fellow middle-class Christians.
The best known was Walter Rauschenbusch, who had gotten his start
as a pastor in New York City’s hardscrabble Hell’s Kitchen neighbor-
hood and whose 1907 book Christianity and the Social Crisis went on
to become an immediate sensation, selling more than 50,000 copies.22
Drawing on modern biblical scholarship but also infused with evangeli-
cal zeal, the book located Jesus in the prophetic tradition of the Hebrew
scriptures and argued that the late antique church’s embrace of wealth
and empire had been a conspicuous betrayal of its founder. Rauschen-
busch insisted that it was not too late to right the course, but that it
would require a fundamental recommitment to Christianity’s “essential
purpose”: “to transform human society into the kingdom of God by
regenerating all human relations and reconstituting them in accordance
with the will of God.”23 The book resonated with white middle-class
Protestant audiences precisely because it seemed to illumine a way forward
through the crises which the Christian activists of the Gilded Age had
intentionally brought to a head. It proved a source of particular encour-
agement to the many who were distressed about ordinary believers’ grow-
ing disaffection from the churches. A Baptist minister in Concord, New
21 Michael Kazin, A Godly Hero: The Life of William Jennings Bryan (New York: Anchor
Books, 2006).
22 Christopher H. Evans, The Kingdom Is Always but Coming: A Life of Walter
Rauschenbusch (Grand Rapids: William B. Eerdmans Publishing Company, 2004).
23 Walter Rauschenbusch, Christianity and the Social Crisis (New York: Macmillan,
1907), xiii.
182 H. W. CARTER
Hampshire, penned a letter in the winter of 1908 relaying that he had
read the book the year before “and ever since it has been working in
my mind.” He had spent the months immediately prior “trying to do
something to arouse my church to the situation and to get into touch
with the labor union men in Concord.” His sermon on “The Church
and the Labor Question” had in fact produced a relational breakthrough
with the workers organized through that city’s Central Labor Union, giv-
ing him hope for the future of the American churches: “If they are ready
in conservative, aristocratic old Concord, they are almost anywhere,” he
reflected.24
They were, indeed, ready elsewhere. These were the decades when
social gospels gained a significant institutional foothold. Nearly every
denomination created boards and committees to consider and coordi-
nate responses to a vast range of social problems, ranging from child
labor and prostitution to temperance and race relations. In 1903 alone
the Presbyterian Church founded a Department of Church and Labor,
and the Congregational and Episcopal Churches established commissions
to investigate industrial problems. The Methodists established a Feder-
ation for Social Service in 1907 and soon thereafter endorsed a “Social
Creed” that called “For the principle of conciliation and arbitration in
industrial dissensions,” “For a living wage in every industry,” and “For
such regulation of the conditions of labor for women as shall safeguard
the physical and moral health of the community.” The following year the
fledgling Federal Council of Churches (FCC)—which would develop into
a powerful vehicle for Protestant collaboration on social problems ratified
that creed. Just over a decade later Roman Catholics established their
own hub for cooperation in the National Catholic Welfare Conference
(NCWC). For years to come its leaders, including notable figures such
as Father John Ryan and Dominican Sister Vincent Ferrer, would devote
themselves to bringing a tradition of modern Catholic economic teach-
ing, inaugurated by the Gilded Age encyclical Rerum Novarum, to the
masses.25
24 Virgil V. Johnson to Walter Rauschenbusch, 11 December 1908, Box 25, Folder 3,
Walter Rauschenbusch Papers, American Baptist Historical Society, Atlanta, GA.
25 See Carter, Union Made, 150–182.
8 CHRISTIANITY AND INEQUALITY IN THE MODERN UNITED STATES 183
During these pivotal early twentieth-century decades social Christians
moreover attained greater clout within local, state, and national govern-
ments, helping to promote certain kinds of egalitarian reforms. From
Samuel M. “Golden Rule” Jones, the mayor of Toledo, Ohio, from 1897–
1899 to J. Stitt Wilson, the Christian socialist mayor of Berkeley, Cal-
ifornia, from 1911 to 1913, they made major contributions to munici-
pal reform. Others such as Norman Thomas sought political office but
never attained it. A graduate of Union Theological Seminary, where he
read Rauschenbusch and more, Thomas ran for governor of New York in
1924, mayor of New York City in 1925 and 1929, and then for president
of the United States as a socialist candidate on six different occasions. He
proved influential despite his penchant for losing, about which he had a
good sense of humor: “I am not the champion of lost causes, but the
champion of causes not yet won,” he liked to say.26
The New Deal was among the clearest of causes won for Christians
devoted to the fight against inequality. The unprecedented avalanche of
legislation signed by President Franklin D. Roosevelt in his first hundred
days alone created a larger and more interventionist federal government
than the nation had ever known. Many members of the Cabinet were
steeped in social Christianity, including Frances Perkins, who as Secretary
of Labor from 1933 to 1945 was one of the welfare state’s foremost archi-
tects. As her biographer, George Martin, writes, “What Perkins chose to
do was determined by her religion. Many Democrats supported the Social
Security Act because it attracted votes; others, for humanitarian reasons;
Perkins, ‘for Jesus’ sake,’ because it brought the City of God closer to
the cities of toil and industry.”27 Her colleague, Secretary of the Inte-
rior Harold Ickes, made these connections explicit when he addressed the
leaders of the Presbyterian Church USA in the spring of 1934. “Christ
wanted men and women to live upright lives,” Ickes acknowledged, “but
he also wanted them to have for each other understanding and good will
and mutual helpfulness. He wished them to be good neighbors. He hated
26 Robert Hyfler, Prophets of the Left: American Socialist Thought in the Twentieth Cen-
tury (Westport, CT: Greenwood Press, 1984).
27 George Martin, Madam Secretary, Frances Perkins (Boston: Houghton Mifflin Com-
pany, 1976), vii.
184 H. W. CARTER
injustice with a righteous hatred. His whole life was a fight against oppres-
sion.”28 In Ickes’s estimation the New Deal reflected not just the prin-
ciples of the Golden Rule but the social vision of the savior himself. He
closed the speech with the confident declaration, “If our civilization is to
advance, if we are to establish on this earth the social state envisaged by
the Founder of Christianity, the citadel of entrenched privilege must be
carried, and in due course, by the grace of God, it will be carried.”29 This
view resonated at the grassroots—perhaps never before had the immoral-
ity of economic inequality seemed so intuitive to so many people—but it
also inspired a backlash in high places. More on that below, but for the
time being, suffice it to say that by the late-1930s, social Christianity’s
influence over both church and state was receding in the face of concerted
political and theological resistance. Its future would rest once more in the
hands of ordinary believers on the ground.
Phase Three: On the March, 1935--1975
During the years stretching from roughly 1935 to 1975 ordinary Chris-
tians committed to a more egalitarian society fundamentally changed the
nation. Throughout the late 1930s everyday believers poured into the
Congress of Industrial Organizations, which organized workers across
lines of race and gender, constructing the kind of formidable big tent
union that had so long proved elusive. Meanwhile, a Catholic Worker
movement founded in New York City by Dorothy Day and Peter Maurin
quietly gained momentum. Day was deeply influenced by the tradition of
Catholic social teaching that had emerged in the Gilded Age and Progres-
sive Era. But unlike many of her fellow believers, she doubted that social
salvation would be achieved through New Deal-style bureaucracies. Later
in life she reflected, “Young people say, What good can one person do?
What is the sense of our small effort? They cannot see that we must lay
one brick at a time, take one step at a time, we can be responsible only
for the action of the present moment. But we can beg for an increase
28 “New Deal Is Based on Christ’s Tenets, Ickes Says in Talk,” Chicago Daily Tribune,
24 May 1934.
29 Department of the Interior Memorandum for the Press, Address by Honorable
Harold L. Ickes, Secretary of the Interior, at meeting of Presbyterian General Assem-
bly, 24 May 1934, Folder 63a, Harold L. Ickes Papers, Library of Congress, Washington,
DC.
8 CHRISTIANITY AND INEQUALITY IN THE MODERN UNITED STATES 185
of love in our hearts that will vitalize and transform all of our actions,
and know that God will take them and multiply them, as Jesus multi-
plied the loaves and the fishes.”30 While many doubted the effectiveness
of Day’s incarnational approach, it caught on well beyond New York City.
Catholic Workers houses sprouted up across the country and out of them
grew many other movements as well, including one which became a force
in 1940s Detroit.
Home to Walter Reuther and the powerful United Automobile
Workers (UAW) union, World War II-era Motor City was also the
place where arguably the most influential chapter of the Association of
Catholic Trade Unionists (ACTU) took shape. The organization infused
Detroit’s union locals with a progressive Catholic spirit. One chapter
affiliated with Chrysler UAW Local 7 declared in its newspaper, “WE,
AS CATHOLICS, HAVE A SPECIAL RESPONSIBILITY TO SEE
THAT OUR UNIONS ARE EFFECTIVE, MILITANT, AND RUN
PROPERLY.”31 1940s Detroit served also as a headquarters for Claude
Williams’ People’s Institute of Applied Religion. Williams had imbibed
the social Christian radicalism of southern churchman Alva Taylor and
now sought to bring it to bear on the racism and classism that structured
life in mid-century Detroit. He took his egalitarian message directly to the
shop floors, even as he galvanized a variety of new initiatives involving
also church youth groups and everyday ministers.32 What was happen-
ing in Detroit was connected to developments in other industrial cities as
well. In Chicago Bishop Sheil had forged close relationships with leaders
in the Congress of Industrial Organizations and in Washington, DC the
National Catholic Welfare Conference was sponsoring summer schools for
women workers.
Even as the labor movement gained steam in the postwar United
States, so did a massive, faith-infused civil rights movement. The break-
throughs of the 1950s and 1960s did not come out of nowhere. Activists
built on organizing traditions cultivated over the course of generations.
30 Dorothy Day, Loaves and Fishes: The Inspiring Story of the Catholic Worker Movement
(New York: Orbis Books, 1997).
31 Matthew Pehl, The Making of Working-Class Religion (Urbana: University of Illinois
Press, 2016).
32 Erik S. Gellman and Jarod Roll, The Gospel of the Working Class: Labor’s Southern
Prophets in New Deal America (Urbana: University of Illinois Press, 2011).
186 H. W. CARTER
The movement was religiously and racially diverse, but at its very cen-
ter were black Christians whose gospel was intuitively egalitarian. Missis-
sippi activist Fannie Lou Hamer did not need to read Walter Rauschen-
busch or W. E. B. Du Bois to know that God longed for her people
to be free. But the movement’s most influential spokesperson, the Rev-
erend Martin Luther King, Jr., had read both of them and many more
besides. King’s speeches moved seamlessly between the biblical prophetic
tradition and the nation’s republican ideals, and brought both to bear on
the systemic injustice of the contemporary American scene. The everyday
activists who showed up for rallies and bore the brunt of the often brutal
opposition were the guarantors of his leverage with high-level negotiators,
who were in turn often anxious, especially given the Cold War context,
to avoid appearing undemocratic. As mass meetings, marches, boycotts,
sit-ins, and speeches parlayed into historic breakthroughs in the form of
court decisions and federal legislation, social Christians collaborated with
numerous others to leave arguably their most lasting mark on American
society.33
Before all was said and done, what began in Detroit and Montgomery
would reverberate all the way to California, where in the 1960s and 1970s
Dolores Huerta and Cesar Chavez mobilized a movement of Latino and
Filipino workers that brought the state’s mightiest growers to the bargain-
ing table. Marching workers carried images of the Virgin of Guadalupe
and framed their protests as pilgrimages. Chavez himself had been deeply
influenced by a Catholic priest who introduced him to the church’s social
teaching, among other things. In his 1966 Plan of Delano he hearkened
back to the Gilded Age encyclical Rerum Novarum, declaring, “All men
are brothers, sons of the same God; that is why we say to all men of good
will, in the words of Pope Leo XIII, ‘Everyone’s first duty is to protect the
workers from the greed of spectators? who use human beings as instru-
ments to provide themselves with money. It is neither just nor human to
oppress men with excessive work to the point where their minds become
enfeebled and their bodies worn out.’” Thanks in no small part to the
33 See David L. Chappell, A Stone of Hope: Prophetic Religion and the Death of Jim
Crow (Raleigh, NC: University of North Carolina Press, 2005); Mary L. Dudziak, Cold
War Civil Rights: Race and the Image of American Democracy (Princeton: Princeton
University Press, 2000); and Taylor Branch’s prize-winning trilogy on America in the
King Years.
8 CHRISTIANITY AND INEQUALITY IN THE MODERN UNITED STATES 187
tenacity of the farm workers themselves, by the early 1970s the move-
ment had successfully organized much of the industry.34 ASocialChris-
tian tradition that had arisen at the grassroots now ushered the nation to
the cusp of the mountaintop—only to fall back down.
Phase Four: Toward a New Gilded Age
How did the United States fall from that mountaintop to an age of nearly
unprecedented inequality? It’s a complex and multi-faceted story, but
major shifts in the American Christian landscape help to explain current
trends. The story extends at least back to the 1930s. From ver y early
in FDR’s administration the heads of the National Association of Man-
ufacturers cultivated relationships with Christian clergymen like James
Fifield, a theologically liberal and economically libertarian Congregation-
alist based out of Los Angeles. Fifield founded an organization called
Spiritual Mobilization, which sought to defeat the New Deal by rally-
ing clergy and ordinary believers alike to the gospel of free enterprise.
Whereas many social Christians found in the Bible a plain justification for
redistributionist programs, Fifield and others of his ilk argued that the free
market way was not only the American way but also God’s.35 They set out
to dismantle the social gospel institutions that had been so painstakingly
constructed earlier in the twentieth century.
By the early 1950s, for example, Fifield was coordinating a frontal
assault on the Congregationalist Church’s Council for Social Action. He
sent letters to leading churchmen, which stated, “Some of us have become
very much concerned about the Council for Social Action of our Congre-
gational Denomination. Our Methodist friends tossed that group out of
their General Conference a year or so ago.” He went on to explain, “It
certainly does not act for me and I am sure not for you and most Congre-
gationalists – yet it maintains a registered lobbying office in Washington,
and presumes to speak on many issues which are of vital importance in
34 Luis D. Leon, The Political Spirituality of Cesar Chavez: Crossing Religious Borders
(Oakland: University of California Press, 2014).
35 See Kevin Kruse, One Nation Under God: How Corporate America Invented Christian
America (New York: Basic Books, 2015); and Darren Dochuk, From Bible Belt to Sunbelt:
Plain-Folk Religion, Grassroots Politics, and the Rise of Evangelical Conservatism (New
York: W. W. Norton, 2011).
188 H. W. CARTER
relation to National and world trends.”36 When the head of the Coun-
cil confronted Fifield about the discord he was sowing, he responded
matter-of-factly, “my personal feeling about the Council for Social Action
is exactly as it has been through the years and as I explained to you last
time we talked; namely, that we should not have a Council for Social
Action, that the net end result has been a liability rather than an asset.”37
The campaign was hardly limited to California. The chair of one allied
group, The Committee Opposing Congregational Political Action, was
based in Minneapolis; its board included members from Connecticut,
New York, Michigan, Illinois, and more. That group distributed a book-
let with the ominous title “They’re Using Our Church…” When one
turned the page, the words TO PLAY POLITICS! appeared in capital-
ized and emboldened text. The authors went on to accuse the Coun-
cil of favoring “socialized medicine,” of having personal connections to
“Communist Fronts,” and of being soft on Russia and China. The book-
let closed with an action plan for the reader to pursue and a choice quote
from Abraham Lincoln: “…With Firmness In The Right, As God Gives
Us To See The Right.”38 The coordinated effort proved highly effec-
tive. As one Congregationalist pastor went on to report to the Council
for Social Action’s leadership, “the CSA, as presently organized, is ‘dis-
credited’ among many.”39 Christian libertarian crusaders such as Fifield
did not struggle to find major boosters in both the philanthropic and
corporate worlds. Groups such as Spiritual Mobilization struggled ini-
tially to gain traction at the grassroots but a number of larger factors and
forces would work together, over time, to yield a new harvest of ordinary
Christian converts to the gospel of free enterprise.
One such factor was the Cold War. Over the course of the nation’s
standoff with the Communist and atheistic Soviet Union it would come
to seem to more and more believers that Christianity, free enterprise,
and American patriotism were a match made in heaven. The specter of
36 James W. Fifield, Jr., to Mr. W. H. Danforth, 24 September 1951, Box 1, Folder
BR 5, Council for Social Action Papers, Congregational Library, Boston, MA.
37 James W. Fifield, Jr., to Dr. Ray Gibbons, 1 November 1951, Box 1, Folder BR 5,
Council for Social Action Papers, Congregational Library, Boston, MA.
38 “They’re Using Our Church…” Booklet, Box 1, Folder BR 2, Council for Social
Action Papers, Congregational Library, Boston, MA.
39 Henry David Gray to Liston Pope, 13 June 1953, Box 1, Folder BR 5, Council for
Social Action Papers, Congregational Library, Boston, MA.
8 CHRISTIANITY AND INEQUALITY IN THE MODERN UNITED STATES 189
violent totalitarian regimes was raised to defeat even modest calls for
economic redistribution and social welfare programs. Christian socialism,
which had enjoyed a significant following of working-and-middle-class
believers throughout the late nineteenth and early twentieth centuries,
became not just taboo but in fact grounds for investigation and black-
listing. Meanwhile, savvy entrepreneurs such as Sam Walton, the founder
of Wal-Mart, would capitalize on the opportunities the early Cold War
revival presented, enveloping hard-nosed labor and supply chain prac-
tices in a service ethos and faith-and-family-friendly brand that resonated
first across the Bible Belt and before long the entire land. For countless
employees and customers alike, serving God and serving companies like
Wal-Mart came to seem almost of a piece.40
Another key factor in the rise of grassroots conservatism was the white
response to the Civil Rights movement. The resistance included an explic-
itly racist wing, which enjoyed strong support not only in the South but
also in Northern cities where white residents, outraged by open hous-
ing laws, often turned viciously on black neighbors. This movement,
whose figurehead was the arch-segregationist George Wallace, inflicted
great damage, but its long-term impact paled in comparison to that of
an emerging white “silent majority” whose unrelenting faith in meritoc-
racy eroded support for structural approaches to addressing inequality. Its
strongholds were the Sunbelt suburbs, which were also increasingly the
nation’s demographic center of gravity. The silent majority rejected New
Deal-style programs in favor of colorblind, laissez faire policies, which
contradicted many a denomination’s social teaching, but which dovetailed
seamlessly with the doctrines of a surging Christian libertarianism.41 This
tension between official church positions and the faithful’s economic out-
look was not always apparent in local churches and parishes, far removed
as they were from denominational headquarters. And with the 1980s
emergence of a hard-charging Religious Right—which saw a role for the
state in controlling individual behavior, but not in promoting distribu-
tive justice—any remaining whiff of tension between Christian convictions
and neo-liberal economics evaporated for countless white Protestants and
Catholics alike.
40 Bethany Moreton, To Serve God and Wal-Mart: The Making of Christian Free Enter-
prise (Boston: Harvard University Press, 2009).
41 Matthew D. Lassiter, The Silent Majority: Suburban Politics in the Sunbelt South
(Princeton: Princeton University Press, 2006).
190 H. W. CARTER
Other key factors took shape far from the realm of formal politics.
Throughout the twentieth century’s final decades, millions of ordinary
believers joined churches which taught that prosperity came not through
gritty organizing efforts but rather through individual access to divine
power. Drawing on a tradition in modern American life that stressed
the power of positive thinking, preachers such as Houston’s Joel Osteen
argued, “You can change your world by changing your words.” Mil-
lions more who did not attend prosperity churches still voraciously con-
sumed therapeutic Christianities and their proliferating products: books,
magazines, devotionals, music, clothing, and more, which blended faith
and self-help for a generation that took pride in being spiritual but not
religious.42
Social Christianity never completely disappeared, but it was increasingly
relegated to the margins of American life. Throughout the Reagan years
and in the decades that followed it animated movements for nuclear disar-
mament and immigrant and refugee rights. Black social gospelers contin-
ued to prophesy against structural racism but their message largely failed
to gain traction with a white Christian majority persuaded that the nation
had addressed its original sin back in the Civil Rights era. Incontrovert-
ible visual evidence of police brutality changed some white minds in the
early twenty-first century. But in its initial phase at least, the Black Lives
Matter movement succeeded more at calling attention to violations of
individual rights than to the structural underpinnings of persistent racial
inequality. On an even broader scale, if many ordinary believers had once
seen structural inequality as a sin they were called to fight, it now came to
seem almost natural and in some cases even God ordained. As older moral
intuitions faded, a new refrain came into vogue: “That’s just the way the
market works.” As that logic took hold, not just in many pulpits but also
in the pews, it became clear: the dream of a more egalitarian society had
flourished first at the grassroots and it withered there too.
42 Kate Bowler, Blessed: A History of the American Prosperity Gospel (New York: Oxford
University Press, 2013); Heather Hendershot, Shaking the World for Jesus: Media and
Conservative Evangelical Culture (Chicago: The University of Chicago Press, 2004); R.
Laurence Moore, Selling God: American Religion in the Marketplace of Culture (New
York: Oxford University Press, 1994); and David W. Stowe, No Sympathy for the Devil:
Christian Pop Music and the Transformation of American Evangelicalism (Raleigh: Uni-
versity of North Carolina Press, 2011).
8 CHRISTIANITY AND INEQUALITY IN THE MODERN UNITED STATES 191
The impact is felt today across the nation. Arguably nothing so dramat-
ically underscores the diminished status of social Christianity as the latter-
day collapse of the labor movement. A working paper published by several
Princeton economists earlier this year underscored once more that unions
remain one of the surest bulwarks against spiraling income inequality.43
Yet in the early twenty-first century—with fully seventy-seven percent of
the nation’s population still identifying as Christian—less than seven per-
cent of private sector workers belong to unions. For social Christians—
whose visions of justice rolling down like waters had, just a single genera-
tion before, transfixed the nation—such developments are clear evidence
of a return to the wilderness.
But hope persists, even in the wilderness. Several years ago, for one
long winter night, the daunting realities of our new Gilded Age seemed
almost destined to be overcome. As the mass meeting got underway at
Selma’s Tabernacle Baptist Church, hundreds were still filing in, hoping
to find a place to stand in the balcony or along the perimeter of the
main sanctuary below. It was March 5, 2015, nearly fifty years to the day
since the infamous “Bloody Sunday” march that had earned this other-
wise unremarkable town, the seat of dirt poor Dallas County, Alabama, a
place in the annals of the twentieth century. Many of the saints who pow-
ered the local movement long before Martin Luther King, Jr., ever set
foot in Selma were seated in the first two rows. The choir got things off
to a rousing start, but then halfway through its set a hush descended on
the place. Someone was wheeling Amelia Boynton—frail now at 103 years
old, but in her prime the most formidable thorn in the side of the area’s
white supremacist ruling class—to the front. Eyes that had not yet dried
watered freely once more as the multiracial assembly belted out the lyrics
of the old freedom song, “We Shall Overcome,” and as NAACP President
Cornell William Brooks invoked the memory of Medgar Evers, the mar-
tyred activist whose last words, as he lay bleeding, were “Sit me up! Turn
me loose!” Stirring reflections from luminaries such as Jeremiah Wright
and Bernice King followed, but it was the Reverend William J. Barber II
who brought down the house. He began softly, even tentatively, but soon
43 Henry S. Farber, Daniel Herbst, Ilyana Kuziemko, Suresh Naidu, “Unions
and Inequality over the Twentieth Century: New Evidence from Survey Data”
(working paper), available via https://dataspace.princeton.edu/jspui/bitstream/88435/
dsp01gx41mm54w/3/620.pdf (accessed 8 August 2018).
192 H. W. CARTER
enough was thundering against contemporary manifestations of inequal-
ity, including the 2013 Supreme Court decision that had eviscerated the
hard-won 1965 Voting Rights Act. Over and over Barber vowed that
God’s people must see this historic anniversary not as a “commemora-
tion” but rather as a “consecration” to the work of justice and righteous-
ness in our time. By the time he reached the climax of his address, the
crowd was on its feet, applauding vigorously and shouting “Amen.” The
Spirit did not move like this nearly as often as it once did.
Prior to that evening in Selma, I had never heard of Barber. His is
still not a household name, though his renown certainly grew when in
2016 he delivered a nationally televised address at the Democratic Con-
vention. He earned a slot on that stage through his work galvanizing
the “Moral Mondays” movement, which rallied thousands in protest of
the North Carolina state legislature’s sweeping tax cuts, funded in part
by corresponding cuts to Medicaid and unemployment benefits. Some
credit Barber’s leadership with helping to unseat Republican Governor
Pat McCrory in 2016, though notably, the legislature itself remains over-
whelmingly dominated by the movement’s conservative opponents. Bar-
ber has made clear that he rejects both the religious right and the religious
left. His is not a partisan but rather a biblical movement. Last summer he
reduced his obligations in North Carolina in order to focus on organizing
a new “poor people’s campaign” that he hopes will change the nation’s
“moral narrative.” It will be an uphill fight.
We historians are not in the business of predicting what happens next.
But this much seems clear: American Christians played pivotal roles in
getting us into this New Gilded Age and we are in urgent need of a
renewal of Christian economic thought and practices today if we are to
have any hope of finding our way out.
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CHAPTER 9
Faith and Work: Brave New World?
David W. Miller
Introduction
The venerable cultural etiquette queen of the early twentieth century,
Emily Post, advised in her classic book, Etiquette in Society, in Business,
in Politics, and at Home (1922) that polite company should never talk
about sex, politics, or religion. These gradually became known to be the
three taboos. The logic behind these taboos is that each of these topics
are so emotive, so personal, and so difficult to talk about that it is simply
better to avoid them. The risk of offending someone or being misunder-
stood is so high that it is more prudent to ignore the subjects altogether.
And for almost a century the business world followed her advice. After
all, in those days corporate leaders sought to conform to society, whereas
contemporary leaders seek to transform society and challenge outdated
and discriminatory social norms.
Businesses have typically eschewed involvement in personal or contro-
versial subjects, wanting to protect their brand to avoid offending employ-
ees or clients and other stakeholders. So it is logical that, for decades,
the corporate world has religiously followed (pun intended) Emily Post’s
advice that sex, politics, and religion were considered taboo subjects.
D. W. Miller (B)
Princeton University, Princeton, NJ, USA
e-mail: dwm@princeton.edu
© The Author(s) 2020
T. Akram and S. Rashid (eds.), Faith, Finance, and Economy,
https://doi.org/10.1007/978- 3-030-38784-6_9
197
198 D. W. MILLER
However, just because certain subjects are difficult to talk about does
not in itself mean one should not try. Indeed, avoiding the discussion of
taboos or other awkward subjects such as racism often causes even more
problems. Indeed, many leaders and their companies have realized that
the greater danger lies in ignoring important topics, regardless of how
delicate or awkward they may be. And that one’s brand may be harmed,
and stakeholders might be upset if the company does not address issues
seen as central to human identity and part of creating a diverse and inclu-
sive workplace.
Thus, over the past few decades the three taboos have gradually crum-
bled, giving way to various strategies to engage and discuss sex, poli-
tics, and religion in a corporate context. Today in corporate America, and
many other countries around the world, the first two taboos have largely
fallen by the wayside. Sex was the first taboo to come out of the closet.
Starting with new birth control methods, eventually public discourse
about sexuality, sexual orientation, and more recently sexual harassment
(e.g., the #metoo movement) became normative not avoided. Admired
companies, whether small or large, have developed thoughtful and specific
policies to address questions of sex, including sexual orientation, sexual
identity, sexual misconduct, office relationships, and sex-related medical
benefits. These matters remain deeply personal and views may differ, but
companies realize that to not talk about them and develop specific poli-
cies hurts business by affecting, among other things, the attraction and
retention of a wider talent pool.
The second taboo, politics, has also gradually fallen. Large companies
and industry associations now invest significant resources lobbying regu-
lators and politicians for policies favorable to their industry. Many com-
panies make it a practice of supporting candidates from both political
parties so as to hedge their bets for whoever wins. And CEOs are increas-
ingly pressured by their employees to speak out on government policies
they disagree with or find offensive, including issues such as immigration,
the environment, healthcare, gender, and racism. So discussing politics,
while still potentially emotional and divisive has become a normative part
of corporate life and conversation.
So what about the third taboo, religion? That is the subject of this
chapter. Have companies come to a stage where, like sex and politics,
they find business value in engaging the topic? Or is it still best to avoid
the topic for fear that it remains too emotive, conflictual, and divisive?
9 FAITH AND WORK: BRAVE NEW WORLD? 199
We’re Not in Kansas Anymore: Today’s
Workplace Context Has Changed
In the classic 1949 movie, The Wizard of Oz, the lead character Dorothy
utters a memorable line. As she is magically transported from her idyllic
irenic life in the Midwest to the imaginary land of Oz, with anxiety in her
voice she says to her pet dog, “Toto, I have a feeling we’re not in Kansas
anymore.”
One could say the same about virtually every aspect of corporate life
today versus even just a few decades ago. We increasingly live and work
in a digital, technology-driven economy. Phrases like the gig economy,
Industry 4.0, and the like abound. The old boundaries between work
and personal life are blurred. At work most white-collar workers take
time to tend to personal chores. And when at home they catch up on
emails, participate in conference calls, and do other forms of work via
various forms of connectivity to their office, clients, and vendors. In addi-
tion, whether by choice or necessity, both white- and blue-collar workers
frequently change companies and career paths. A job for life with one
employer is an anachronism. And while discrimination still exists, women
and minority groups are increasingly breaking down workplace barriers
and gaining access to the most senior levels of virtually all sectors.
Moreover, employees of all ages, and particularly the Millennial and
Z generations, are no longer content to live a bifurcated life. They want
to bring their whole self to work and not leave an essential part of their
identity or important aspects of themselves in the parking lot. They do
not want to feel ashamed or hide who they are or what they believe. This
applies to visible parts of their humanity such as race, ethnicity, gender,
and even hairstyle or body art. And this holistic instinct also applies to
often hidden or less visible parts of their identity such as gender orienta-
tion and faith.
A further change between our times and Dorothy’s is language itself.
Words have always mattered, but maybe even more so today. The word
“religion” has itself become a very loaded term, not just descriptive. Many
in the West view religion as a pejorative term, viewing it as judgmental,
exclusive, and divisive. They often prefer the term “spirituality” finding
it more open, inclusive, and not doctrinal. Yet some people who view
themselves as “spiritual but not religious,” ironically, have such a similar
doctrinal certitude about their worldview that they too, exhibit the same
200 D. W. MILLER
judgmentalism toward religious people that they eschew in religious peo-
ple. To navigate these linguistic tensions, I find it helpful to use the term
“faith” as a more neutral term, one which includes both religion and spir-
ituality. After all, one hundred percent of the population have faith. Their
faith may not be theistic in nature, but they have faith in something, be it
science, reason, or experience. Faith may be theistic or non-theistic. Put
another way, we all have a worldview or Weltanschauung through which
we filter our experiences, actions, and beliefs, and how we find meaning
and purpose.
For the purposes of this chapter, however, I largely use the term reli-
gion in deference to Emily Post’s provocative trope we are investigating;
whether speaking about religion at work is still taboo. I invite the reader
to mentally substitute the word spirituality, worldview, or faith, if that
helps follow the logic of this article.
Another driver toward removing the taboo of religion at work is
the dramatic changes over the past few decades in the religious profile
and practices of the United States workforce. Long gone is any sense
of religious homogeneity that conceived of the country as comprised
of predominately mainline Protestant Christians or Judeo/Christian in
nature and culture. Due to a variety of factors, most notably immigra-
tion, the number of Catholic Christians is now 21% of the population and
growing. Evangelical Protestants account for 25% of the population and
black Protestants account for 7%. The number of once culturally domi-
nant mainline Protestants is shrinking and now claim barely 15% of the
population.1
Of equal interest is how immigration patterns are causing a rise in non-
Christian traditions, including Muslims, Sikhs, Hindus, Buddhists, and
others. And finally, research reveals a significant increase in those who
self-describe as spiritual-but-not-religious, agnostics, atheists, and the so-
called “NONES” (pun intended) who pollsters describe as fitting none of
the traditional religious categories. And these significant statistical changes
to the religious landscape have almost forced the conversation upon the
business world, making it a topic they can no longer avoid or consider
taboo. After all, who is going to tell Indra Nooyi (a Hindu), the recently
retired CEO of PepsiCo that her religious identity, or that of the vast
1Pew Research Center, “The Changing Global Religious Landscape” (2017).
9 FAITH AND WORK: BRAVE NEW WORLD? 201
number of Hindus and Muslims who work in Silicon Valley that their
religious identity is taboo?
Dorothy was right when she said, “Toto, I have a feeling we’re not in
Kansas anymore.”
Research into the Intersection of Faith and Work
Many universities (both private and public) and non-profits are increas-
ingly studying the subject of faith, work, and economics in the context
of today’s society. My own role, directing Princeton University’s Faith &
Work Initiative (FWI) is but one example of many scholarly enterprises
studying this phenomenon. FWI’s mission is to “conduct research into
faith and work, developing theoretical frameworks and practical resources
for leaders in the marketplace.” This involves interfaith and interdisci-
plinary thinking. Some of FWI’s areas of research include: studying the
faith at work movement; researching the nature of work, technology,
and labor in the new economy; connecting ancient religious ideas and
resources to modern-day marketplace concerns; developing a psychomet-
ric scale that reveals how people of all traditions manifest or live out their
faith at work; and considering the role of religious traditions as a resource
for business ethics.
As noted above, one theme that continually emerges in our research
and that of other scholars, is that employees no longer wish or are will-
ing to compartmentalize their life by hiding or shutting down essential
parts of their being. For many people their faith, their religious tradition,
or their spirituality is an important, if not central, part of their identity
and humanity. But what does it mean to “bring your faith to work”?
What does faith look like in the workplace? How do people integrate
their spirituality and work? Isn’t that going to be messy, disruptive, and
cause conflict at work?
The C as e for “Conflicting Forces”
It is not without good reason that many in the business world, and other
parts of society have historically considered religion as a taboo subject.
Let’s consider some of those claims and their validity:
202 D. W. MILLER
•Religion is divisive—Yes, religion is a topic that can divide its various
adherents. There are too many examples of religiously motivated vio-
lence, which one fears might spill over into the workplace. In some
work contexts people from minority religious traditions are reluctant
to voice or practice their faith for fear of discrimination.
Though religion can be divisive, it need not necessarily be divisive.
Moreover, it can also, when handled thoughtfully and respectfully, be
a uniting force. People of different traditions can often find common
ground and mutual respect that they each believe in a divine figure
even though their understandings of that may differ. Indeed, other
aspects of humanity, such as race and ethnicity can also be divisive.
Some might even argue that baseball and football allegiances culti-
vate even more hatred and violence between adherents of one team
or club and another!
But scholars and practitioners rightly argue that those attributes
are not prima facia divisive. Indeed, thoughtful companies have fig-
ured out how to manage through the potential conflictual issues of
race and ethnicity and are now learning to do the same with faith at
work.
•Religious accommodation is disruptive to the work environment—
many religious traditions require their adherents to do or not do
certain actions. Some are required to pray at precise times during
the day. Some are required to wear certain attire (or, conversely, not
to wear certain attire). While others are forbidden to touch certain
products (e.g. alcohol, pork) or be involved in certain job functions
or industry sectors. And yet others might have a desire or religious
duty to be absent from work to observe certain holy days or leave
work before sundown on their Sabbath. Individually and collectively
these and other accommodation issues can conflict with or disrupt
workflows, serving customers, and other business needs.
Generally speaking, the legal test is that employers are obli-
gated to accommodate reasonable requests of sincerely held religious
beliefs or practices so long as they do not unduly disrupt the busi-
ness. This rule of thumb is based on Title VII of the Civil Rights
Act of 1964, which
prohibits employment discrimination based on religion. This includes
refusing to accommodate an employee’s sincerely held religious
beliefs or practices unless the accommodation would impose an
9 FAITH AND WORK: BRAVE NEW WORLD? 203
undue hardship (more than a minimal burden on operation of
the business). A religious practice may be sincerely held by an
individual even if newly adopted, not consistently observed, or
different from the commonly followed tenets of the individual’s
religion. https://www.eeoc.gov/eeoc/newsroom/wysk/workplace_
religious_accommodation.cfm
In practical terms, this is a fairly low bar, meaning that companies can
legally decline accommodation to requests they deem too disruptive.
But the fundamental point is that employers have a legal obligation
to at least try to accommodate religious accommodation requests.
Many companies have sought to learn more about the accommoda-
tion requests and work with employees and groups sharing certain
religious requirements to find creative ways to honor the employee
request without causing disruption or conflict. Indeed, in a tight
labor market, employers who are known to be “faith-friendly” (not
to be confused with faith-based) i.e. companies who welcome and
embrace people who want to bring their faith to work, become very
desirable employers. Both common sense and bottom-line impact
are leading enlightened companies to encourage supervisors to find
creative solutions to accommodation requests and thereby to attract
and retain the best talent.
•Religious harassment—harassment is a serious issue and a legiti-
mate concern in the workplace. It is related to another serious issue
known as a “hostile workplace.” Workplace harassment can take
many forms, including sexual, racial, and religious. Charges of reli-
gious harassment emerge when someone might be mocking or dis-
respecting someone for their religious beliefs, or conversely, being
overly zealous trying to persuade someone to become a part of their
belief system.
•Proselytizing—while proselytizing is usually considered offensive and
inappropriate, many are surprised to learn that strictly speaking, it is
not prima fascia illegal. It becomes illegal when the recipient states
they do not wish to be the recipient of such overtures and com-
munications. When proselytizing crosses this line, it can be deemed
harassment or part of a hostile workplace, and cause for legitimate
complaints.
•Quid pro quo—is a form of favoritism or discrimination where a
supervisor, for example, might offer a promotion to an employee
204 D. W. MILLER
solely on the condition they agree to attend their church or some
similar condition.
The C as e for “Convergent Resources”
The above case for “conflicting forces” raises several legitimate and impor-
tant points. Some of them, when viewed more closely also have a posi-
tive side (e.g. accommodation) whereas others are always conflictual and
problematic (e.g. harassment). While not trying to minimalize the con-
flictual issues, we also note that many of these challenges are not unique
to religion or faith in the workplace. Harassment, quid pro quo, and other
discriminatory practices are not the sole domain of religion. Other topics
and issues can also be conflicting forces in the workplace.
So why should religion be singled out as a taboo, whereas other per-
sonal and often emotive topics (e.g. gender, sexual orientation, race, and
ethnicity) are seen as core parts of company diversity and inclusion (D&I)
programs and are not seen as taboo? Indeed, research and experience sug-
gest that with appropriate education, training, and policies, the potential
problems associated with other D&I categories and groups are manage-
able if not largely avoidable. Moreover, there is increasing evidence—just
as has been demonstrated with other forms of diversity—that faith and
work, properly implemented, can bring many positive benefits to employ-
ees and the business as a whole.
If that is accurate, what then are some of the possible benefits asso-
ciated with faith at work? What is the business case for not just tolerat-
ing but embracing faith and work as convergent resources? The reasons
are many but before presenting them, let me first outline the four typi-
cal organizational attitudes toward or ways that companies approach the
concept of faith at work2:
•Faith-avoiding—companies that are faith-avoiding attempt to stifle
or prevent any manifestation of faith at work, be it verbal, attire,
items in their workspace, or use of company property for any gath-
erings or other uses. They generally view faith at work as conflict-
ual, problematic, inappropriate for a business context, and generally
2Miller, D. W. and Ewest, T., “A New Framework for Analyzing Organizational Work-
place Religion and Spirituality,” Journal of Management, Religion, and Spirituality,Vol.
12, No. 4, 2015, 305–328.
9 FAITH AND WORK: BRAVE NEW WORLD? 205
are unaware of or choose not to follow Title VII laws against reli-
gious discrimination at work. Some companies in this faith-avoiding
category may simply not think holistically or even know that many
employees want to bring their whole selves to work, including their
faith.
•Faith-tolerant—companies that are faith-tolerant (or as I call them
in the article, “faith-safe”) will follow the minimal legal accommo-
dation required by law but avoid full embrace of faith and work as
a company policy. My research suggests that most companies today
fall in this category. They are not hostile to faith at work as some
faith-avoiding companies maybe, but they are reluctant if not afraid
to put in place formal policies and practices to welcome this as a
new form of D&I. This reluctance may come from legal guidance or
from (somewhat ironically) the chief human resources officer. These
companies ascribe to the old adage, “if it ain’t broke, why fix it?”
The answer, of course, is that it will break someday, and the com-
pany may be on the wrong end of a wrongful dismissal or religious
harassment lawsuit.
•Faith-based—companies that are faith-based are typically small or
medium-sized family or owner-operated businesses who clearly state
that their company values and how they conduct business are
grounded in a certain religious tradition. Not surprisingly, that tra-
dition is the religious identity of the family or owner. Thus, they
strongly embrace faith at work. But they risk causing real or per-
ceived discomfort to if not discrimination against employees or job
applicants who do not ascribe to that particular religious tradition.
Faith-based companies are not illegal, but if over 10 employees, they
must follow the same Title VII guidelines as larger companies.
•Faith-friendly—finally companies that are faith-friendly are different
than the other three approaches in several ways. First, they don’t
avoid or merely tolerate faith at work. Nor do they have a single
espoused religious identity. Rather, they embrace faith identities as
a whole, welcoming and respecting people of all faith traditions,
including worldviews such as atheism and agnosticism. Indeed, all
people have a worldview or a “life philosophy,” whether structured
or informal; something they use as a baseline or a filter for meaning,
purpose, ethics, and how to live their life.
206 D. W. MILLER
Faith-friendly companies give all people an equal seat at the table, and
equal dignity and respect. Faith-friendly companies recognize that con-
flicts can occur, so they invest in training, education, and having thought-
ful policies that help reduce if not avoid conflictual issues that arise from
religious motivations.
Some faith-friendly policies and practices are tangible and visible, while
others are less tangible or visible. A company might start by creating writ-
ten faith-friendly policies and including them on their web site and other
internal policy materials. These would send a signal and overarching mes-
sage to management, employees, and applicants that bringing your faith
to work is not only okay but embraced. And that as a faith-friendly com-
pany they welcome people of all faith traditions, whatever they may be.
Other examples of faith-friendly practices include but are not limited to:
offering kosher and halal food in company cafeterias or meetings; try-
ing to avoid scheduling major company or client events/meetings dur-
ing known religious holidays; making conference rooms available for faith
groups to meet for study, prayer, or fellowship; creating dedicated medita-
tion or prayer rooms open to all; hosting education events to learn about
various religions and their major holidays; and consider having sanctioned
religious affinity groups/business resource groups with the same standing
and access to resources as women’s, LGBTQ+, and other D&I affinity
groups have.
Faith-friendly companies feel it is not only the “right thing to do”
to embrace faith as part of D&I and holistic thought. They also see the
potential business and bottom-line benefits accruing from such creating a
culture of faith-friendliness.
So what are these benefits that emerge from companies that view
faith and work as convergent resources and adopt a posture of faith-
friendliness? Here are but a few reasons, all of which are backed up by
a growing body of research in the Academy of Management and other
scholarly guilds, as well as field research and practical experience:
•Diversity & Inclusion—most successful and admired companies
articulate a strong commitment to D&I, often citing it as a core
value. Companies are quick to point out that not only is this the
right thing to do, but it also brings bottom-line business benefits.
Research suggests that over time diverse teams outperform homoge-
nous teams, bring innovation, and help improve the attraction and
retention of talent. Leading companies across a variety of business
9 FAITH AND WORK: BRAVE NEW WORLD? 207
sectors, such as Deloitte, Accenture, Tyson Foods, and VMware,
are also realizing that diversity should not be limited to traditional
aspects such as race, ethnicity, gender, and gender orientation, but
should also include socio-economic diversity, and idea, religious, and
worldview diversity.
•Generational difference and trends—Millennials now constitute over
50% of the American workforce.3And the new Z generation is
already making its impact. Common to both is an embrace of this
expanded view of diversity and inclusion that includes idea, religious,
and worldview diversity. The idea of not bringing their whole self to
work is inconceivable to them.
•Evidence for and trends toward holistic lifestyles—growing bodies
of scholarly research in various guilds, including human resource,
psychology, and management overwhelmingly find that treating
employees holistically enhances a host of business metrics. This is
embodied by the companies who typically appear on “most admired”
and “best place to work” lists who have discovered the business ben-
efits of supporting holistic practices. And faith or spirituality at work
is one part, and for many people a central part, of living and working
holistically.
•Well-being—No longer do companies ignore or stay removed from
influencing the personal well-being of their employees. Today, com-
panies realize that healthy employees are better employees. Many
companies offer a wide range of personal health benefits, includ-
ing subsidized (if not free) gym memberships, yoga classes, mental
health resources (e.g. Employee Assistance Programs), and smoking
cessation programs. Many also offer free programs to stimulate the
mind, including professional development opportunities, in-house
classes, and subsidized external education opportunities. A logical
extension of this commitment to supporting employee well-being is
for companies to consider the spiritual well-being of their employees,
including developing faith-friendly policies and practices to support
employee well-being. Some companies even offer chaplaincy services
on workplace premises. Participation in all of these well-being pro-
grams is, of course, voluntary.
3Pew Research Center, “Millennials Are the Largest Generation in the U.S.
Labor Force,” http://www.pewresearch.org/fact-tank/2018/04/11/millennials-largest-
generation-us-labor-force/.
208 D. W. MILLER
•Links between ethical conduct and ethical foundations—I would
never claim that one has to be religious or spiritual to be ethi-
cal. That claim is invalidated regularly when we see religious people
doing unethical if not illegal activity. Equally, we regularly see non-
religious people who exhibit the highest moral and ethical rectitude.
Some would conjecture that the key to being and remaining ethical
is to have some sort of moral anchor to help keep one grounded and
to have some kind North Star or reference point for guiding ethical
decision-making and behavior. For many, this anchor and North Star
are religious in nature, while for others it is non-theistic. For those
who are engaged in a faith tradition, there is some research that
suggests that people who retain close proximity to and engagement
in their worship community exhibit deeper commitments to ethical
conduct. Drawing on the Aristotelian teaching of habituation, many
religious traditions believe that virtuous behavior can be learned and
taught by emulating positive role models and the disciplined practice
of virtuous behaviors. I have coined the phrase “ethical fitness™”
as a way to encapsulate that ethical conduct can be practiced and
developed in the same way we can cultivate physical fitness through
a healthy diet, exercise, and discipline. For many people, the foun-
dation of their ethical fitness is grounded in their faith tradition.
WhatDoesFaithatWorkLooklike?
Companies and business leaders might rightly ask, what does faith at work
actually look like? How do people “bring” or manifest their faith at work?
And some also ask, how do I measure this phenomenon?
With over 20 years of studying these and related questions I have come
to several conclusions. Here I will share just three. First, people increas-
ingly want to bring their whole self to work, including their faith. They
no longer want to live a bifurcated life, being one person at work and a
different one at home. Moreover, they are seeking meaning and purpose
in and through their work, not just a paycheck. Two, many who want
to do this are not sure how to do it, receiving little guidance from their
worship communities or religious leaders. And three, most businesses lack
a language and a framework to understand, value, and manage the faith
at work phenomenon.
9 FAITH AND WORK: BRAVE NEW WORLD? 209
To help resolve these and related questions, I have developed an instru-
ment to help describe and measure faith and work integration. But before
outlining it, it is worth remembering a few contextual realities. First, faith
is multidimensional both in what one believes and the many different
practices or ways one might manifest and live out those beliefs. This is true
within specific faith traditions and between differing ones. Second, there is
no one single or typical way of bringing one’s faith to work. Moreover, it
is not necessarily visible or obvious when someone has brought their faith
to work. The stereotype some might conjure up when trying to picture
what faith at work looks like is people who have religious bumper stickers
or icons by their workspace, wear religious garb, or who talk incessantly
about their faith. These stereotypes, like most stereotypes, are grounded
in a partial truth but are ultimately unfair and inaccurate caricatures. In
my research I seek to go beyond the misleading and incomplete stereo-
types of integrating faith and work to discover and paint a much more
complete, diverse, and inclusive picture.
Based on empirical research into hundreds of organizations and thou-
sands of people, I have concluded that there are four typical ways that
people bring their faith to or manifest their faith at work. I call these the
Four Es. And each of the Four Es has two suborientations. My research
also suggests that most people have a natural predisposition (whether con-
scious or subconscious) to accent one of the Four Es or their underlying
suborientations. These manifestations are found in most major faith tra-
ditions. And prescriptively, I would argue that all of these manifestations
have valid theological underpinnings.
I call this framework or typology “The Integration Profile (“TIP”)
Faith and Work Integration Scale” or TIP for short.4Building from my
original theoretical model in God at Work: The History and Promise of
the Faith at Work Movement,5and with the help of gifted colleagues
Tim Ewest, Mitch Neubert, and Nicoleta Acatrinei (each of whom con-
tributed expertise in psychometric scale development), we have developed
this instrument called TIP. It allows people of any faith tradition to learn
what their natural faith/work integration tendencies are and the relative
strength of or lack of focus they have on each of the Four Es.
4Miller, D. W., Ewest, T., and Neubert, M., “Development of the Integration Profile
(TIP) Faith and Work Integration Scale,” Journal of Business Ethics, January 2018, 1–17.
5Miller, David W., God at Work: The History and Promise of the Faith at Work Movement
(New York: Oxford University Press, 2007), 220pp.
210 D. W. MILLER
We are find that individuals, companies, and even congregations are
interested in using TIP as a way to understand themselves and others bet-
ter. Organizations are particularly interested in their aggregate profile and
want to conduct further research to see if any TIP variables have salience
and impact on other important business metrics such as engagement, sat-
isfaction, ethics, meaning, purpose, client service, etc. It is too soon to
tell if there are any generalizable patterns or possible correlations, what
differences might exist between the for-profit and non-profit sectors, and
what distinctions might exist between international data sets or faith tra-
ditions. Dr. Acatrinei and I are currently gathering international data sets
and exploring these and other related questions.
Here is a brief description of TIP’s Four Es and their suborientations,
i.e. the eight overall ways people manifest their faith at work:
•Ethics—those in the Ethics profile tend to live out their faith at
work with a focus on ethics, as informed by or grounded in the
teachings of their faith or worldview. For some, this means a subori-
entation focus on personal ethics and behavior, and on one’s own
conduct (e.g. not cheating on expenses or lying to a client). This
often involves the intentional cultivation of “ethical fitness.” This is a
term I have coined that implies dedication to developing disciplines,
habits, and preparation to have readiness for ethical situations, in the
same way that athletes develop physical fitness to prepare for compet-
itive events. For others in the Ethics profile the suborientation focus
is on social ethics, i.e., the larger ethical impact of their organiza-
tion’s products and services on their clients and wider society (e.g.
do our products cause injury to people or harm the environment?).
•Experience—those in this profile want to experience meaning and
purpose in their work. They want work to be more than a paycheck.
Their faith helps them experience their work as a calling, having spir-
itual value and significance. For some, the suborientation focus is on
the intrinsic nature of the work itself that feels like a calling (e.g.
being a master craftsman, writing beautiful code, mowing a lawn per-
fectly, diagnosing a medical problem). For others, the suborientation
is not the job task itself that brings them meaning per se, but they
experience delight in being part, however small, of the overall pro-
cess that made the end product or service (e.g. working on factory
line but knowing your company makes safe, affordable, high quality
food products or cars to help others live a better life). Notably, to
9 FAITH AND WORK: BRAVE NEW WORLD? 211
experience work as a calling (whether in the job function itself or
being proud of the end product) does not require the work to be
highly remunerative or of a high social standing. Executives, doc-
tors, and lawyers, as well as hourly workers, check-out clerks, and
cab drivers can all experience meaning and purpose in or through
their work.
•Expression—those who are drawn toward the Expression profile as
the way they manifest their faith at work often feel a desire or in some
cases a religious duty to express their faith at work. For some, the
suborientation focus means verbal expression where talking about
and sharing their faith with others is important. While for others, the
suborientation focus is an accent on non-verbal means of expressing
their faith. This expression could involve wearing specific attire (e.g.
a cross, yarmulke, headscarf) or displaying a symbolic object in their
workplace (e.g. a Bible, a statue of the Buddha, or a dreamcatcher).
•Enrichment—people who are drawn to the Enrichment profile tend
to focus on the ways their faith helps them practice and cultivate
inner growth and strength in times of workplace challenges, pres-
sure, or stress. This manifests itself in regular prayer disciplines, devo-
tional practices, and contemplative disciplines that tend to the inner
soul, helping to heal and strengthen. For some, their Enrichment
suborientation practices are very private and done by alone them-
selves, perhaps early in the morning before work, or quietly in their
office or somewhere at their place of work. For others, their sub-
orientation prefers sharing and finding comfort in community, and
engaging their Enrichment practices in a group with others.
Conclusion
We started this chapter pondering whether Emily Post’s so-called three
taboos at work—not talking about sex, politics, or religion—should still
be the norm in business today, with a particular interest in the taboo on
religion. We quickly observed that discussing, thinking about, and devel-
oping corporate policies around sex and politics are normative today. So,
we probed the third taboo, religion. Dorothy helped us realize that we are
not in Kansas anymore. Today’s workplace context has changed; we no
longer live in the business world of 1922 like Emily Post. And as regards
religion no longer being a taboo at work, we asked, is that a good thing?
212 D. W. MILLER
We made a case for faith and work as conflicting forces and as converging
resources. As part of this, we introduced a framework for analyzing the
four typical ways companies address the phenomenon of faith at work,
ranging from trying to stifle it to embracing it.
I concluded that publicly traded and other larger companies who
embrace faith-friendly policies and practices will find it beneficial to
employees themselves and to the company’s bottom line. And finally, we
addressed a simple but not-so-simple question, what does faith at work
look like? Here I introduced The Integration Profile Faith and Work
Integration Scale, more commonly known as TIP, to help provide a lan-
guage and framework to talk about faith, religion, and spirituality in non-
emotive, respectful, informative ways, and constructive ways.
Time will tell whether conflictual forces of the world will insist reli-
gion is still a taboo topic in the work world. Or will companies discover
and embrace that, done in a faith-friendly way, faith and work are indeed
convergent resources. To be continued…
Bibliography
Miller, David W. God at Work: The History and Promise of the Faith at Work
Movement, 220p. New York: Oxford University Press, 2007.
Miller, D. W., T. Ewest, and M. Neubert. “Development of the Integration
Profile (TIP) Faith and Work Integration Scale.” Journal of Business Ethics
(2018), 1–17.
Miller, D. W., and T. Ewest. “A New Framework for Analyzing Organizational
Workplace Religion and Spirituality.” Journal of Management, Religion, and
Spirituality, 12, no. 4(2015): 305–328.
Pew Research Center. “The Changing Global Religious Landscape” (2017).
Pew Research Center. “Millennials Are the Largest Generation in the U.S.
Labor Force” (2018). http://www.pewresearch.org/fact-tank/2018/04/
11/millennials-largest-generation-us-labor-force/.
9 FAITH AND WORK: BRAVE NEW WORLD? 213
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the permitted use, you will need to obtain permission directly from the copyright
holder.
CHAPTER 10
The Moral Ecology of Good Wealth
Michael Naughton
What is good wealth? What are its sources? What logic helps us toward its
created potential? What practices define and sustain its goodness? And, to
the contrary, how does wealth go bad? What are its disorders? And what
logic seduces us to create bad wealth?
To get at these important questions, we need to avoid the all too often
prideful and relativistic response that gives a morally and spiritual deprived
answer: “I get to decide what is good.” “It is my decision.” “I earned it,
and so I control my wealth.” People of wealth who think they are the
source of their wealth suffer from deadly capital vices and in particular
from acedia (Greek akedia,a(absence) +kedos (care), not caring about
caring, indifference) a spiritual laziness that fails to get to the root of
reality.
A fruitful approach to a vision of “good wealth” is to see the inter-
dependent and organic relationship among wealth’s creation, distribution
and charitable dimensions. The relationship among these three stages of
wealth fits well with what Catholic social teaching refer to as “moral ecol-
ogy,” where we see and act on the profound interconnected dimensions
of what good wealth is in terms of a good life and a good institution.
M. Naughton (B)
University of St. Thomas, St Paul, MN, USA
e-mail: mjnaughton@stthomas.edu
© The Author(s) 2020
T. Akram and S. Rashid (eds.), Faith, Finance, and Economy,
https://doi.org/10.1007/978- 3-030-38784-6_10
215
216 M. NAUGHTON
Within this moral ecology, we can also begin to see our blind spots not
in a judgmental moralistic way, but in a way of humility of receiving the
deeper truths of our humanity.
Where I want to begin in this approach is with institutions and in par-
ticular with business as an institution. Some of the biggest debates we
face as a country is over how we understand the purpose of the institu-
tions we live in and in particular the goods such institutions should strive
for. This is no small matter. One of the most significant responsibilities
of leaders in any organization is to articulate, cultivate and execute the
purpose of the institution they lead. What the purpose question does for
an institution is that it clarifies what goods aretobepursuedbyaninsti-
tution and how it orders such goods for the good of the whole. This has
massive implications for the quality of the society we live in. It is precisely
such purposes that give institutions meaning as well as legitimacy in the
communities where they reside.
The pursuit and articulation of institutional purpose is not as easy or
as direct as it may seem, however. One challenge is the significant cul-
tural debate over the institutional purposes of business and the goods
it should promote, universities and education in general, family and the
meaning of marriage, religion and whether it is good for society, govern-
ment and health care. Because of the increasing pluralism of society, we
have difficulty agreeing to a common understanding of the good—the
common good, so our tendency is to go to the least debatable “thin”
approach to the good. This move toward a “least common denomina-
tor,” unfortunately, “flattens” or “dilutes” the good of institutions by
reducing them from a vibrant set of integrated goods to one emotive or
instrumental good—business to shareholder wealth maximization; univer-
sities to career credentialing; religion to emotive experience; marriage to
sentiment between autonomous individuals; and so forth.
In this paper, I want to focus on the institution of business as a way
at getting at what we mean by “good wealth.” In one sense, much of
the economic wealth generated in this country comes from business and
consequently its distribution and charity, and if we are to examine what is
“good wealth” we need to engage business. But first we need to ask the
larger question: what is the good business does?1The document Voc a t i o n
of the Business Leader produced by the Vatican’s Pontifical Council for
1See Robert Kennedy, The Good That Business Does (Acton Institute, 2006).
10 THE MORAL ECOLOGY OF GOOD WEALTH 217
Justice and Peace (now called the Dicastery for the Promotion of Integral
Human Development) speaks about three goods business contributes to
the common good of society2:
•Good Goods: Making goods that are truly good and services that truly
serve;
•Good Work: Organizing work in which employees develop their gifts
and talents so as to serve the larger community; and
•Good Wealth: Creating sustainable wealth so that it can be distributed
justly to the institution’s contributors.
Business is a goods producing institution. When all three goods are
present, business contributes positively to the social conditions that make
it “easier” to foster integral human development—the flourishing of per-
sons and communities. This is what the Catholic social tradition defines
as the common good.
In this paper, I focus on the meaning of “good wealth” keeping in
mind the interrelated dimensions of the other two goods of business—
good goods and good work. I want to focus on what I will call the three
interdependent dimensions of good wealth: (1) stewardship—wealth cre-
ation, (2) justice—wealth distribution and (3) charity—wealth dispersion.
To understand the relationship of these three dimensions and their impor-
tance, a quick glance at one of the great business leaders in United States
history, Andrew Carnegie, can be helpful in orienting us to the issues we
need to face.
In terms of wealth creation, Carnegie was one of the great
entrepreneurial immigrants the US has seen. He went from doing mod-
est low-level organizational tasks to becoming one of the great American
industrialists of the nineteenth and early twentieth century. As an immi-
grant who was a “capable, energetic, ambitious, discontented man,” he
built the Carnegie Steel Corporation into the largest steel manufactur-
ing company in the world. Influenced by the social Darwinist Herbert
2Vocation of the Business Leader (Vatican City: Pontifical Council for Justice and Peace,
2014). https://www.stthomas.edu/media/catholicstudies/center/ryan/publications/
publicationpdfs/vocationofthebusinessleaderpdf/PontificalCouncil_4.pdf. I find the lan-
guage of “goods” to be an important language of business. As Lewis explains “Goods
are ends just in so far as they serve to perfect.” See V. Bradley Lewis, “Is the Common
Good and Ensemble of Conditions,” Archivio di Filosofia, LXXXIV, 1–2 (2016), 130.
218 M. NAUGHTON
Spencer and other thinkers such as William Graham Sumner (although
how Carnegie’ Presbyterian upbringing connects and does not connect
to the Darwinian influence is beyond this paper) as well as by the highly
competitive businesses he worked in, Carnegie viewed business in terms
of the logic of the market. The logic of the market presupposes that noth-
ing is given, that things are only acquired and we wrestle out of nature
her fruits.
In terms of distribution, Carnegie was given the name “robber baron”
along with other American industrialists, such as Rockefeller, Vanderbilt
and Gould. Influence by the Darwinian principle of the survival of the
fittest, Carnegie unethically crushed competitors, bribed government offi-
cials and broke unions. A defender of laissez-faire economics, he drove
costs down including labor costs. This led to sub-living wages and poor
conditions, hostility to unions, resistance to government regulation except
when it protected his firm, and a fundamental allergic reaction to justice
and equity. He actually believed that the concentration of capital was nec-
essary for societal progress by those who knew how to create wealth. For
Carnegie, unions for example, impeded the evolutionary progress of the
market by “unnaturally” pushing up the cost of business and protecting
the narrow interests of labor.
In terms of charity, Carnegie famously wrote he “who dies rich, dies
disgraced.” He saw himself as well as others with resources as trustees of
their wealth who should live without extravagance, provide moderately for
their families, and use their riches to promote the welfare and happiness
of others.
There is much to admire about Andrew Carnegie as well as many other
entrepreneurs and business people who work hard and give much. His
virtues of personal frugality, sacrifice and hard work are essential for good
business. But like all of us, they have significant blind spots. For Carnegie,
he saw little inconsistency between how he distributed his wealth and how
he created it as well as gave it away. The point here is not to condemn
Carnegie. There is way too much condemning of historical figures from
the modern perch. But good qualities become polluted when business-
people discount one of the important functions of good wealth such as
its distributive function. And it should be noted that there are many blind
spots in discerning good wealth, such as those social justice warriors who
denigrate charity and who only see justice in terms of the regulations of
the state. Or companies that create harmful products such as pornography
10 THE MORAL ECOLOGY OF GOOD WEALTH 219
or tobacco, yet, justify their firms because they pay just wages and taxes.
Good wealth entails a moral ecology where all three functions are inter-
connected. When one function is in disorder, the whole is disordered.
This paper explores in detail the three functions of good wealth and their
ordered interconnections.
Wealth Creation: Stewardship
In terms of wealth creation, business enterprises are the economic engine
of society. As a creator of products and services (good goods) and jobs
(good work), business must exercise the stewardship of resources in a
way that it creates more than what it has been given.3Good stewards of
wealth are those who do not only take from creation’s abundance, but
they contribute to it. In business, this stewardship demands a great deal
of frugality and economic discipline, tracking carefully costs and revenue,
driving out waste, improving production processes, delivering on time,
enhancing quality, and so forth.
When a business generates more than what has been given to it, we
call it profit or margin, a surplus of retained earnings over expenses. This
profit enables a company to sustain itself into the future. Profits wisely
used over time create equity in companies, which strengthens the firm’s
wealth generating capacities to build for the future. A business with a
healthy balance sheet, for example, simply has greater abilities to build a
future than those laden with debt. It can handle the unexpected down-
turns of the economy. A profitable business creates the conditions for
well-paying jobs, opportunities for employee development, useful prod-
ucts and services, satisfied customers, and vibrant communities.
Yet, profit is like food. You need it to be healthy and sustainable, but
you ought not to live for it. It is a means not an end, a reward not a
motive (which is why so many executive incentive programs can be so
destructive). Profit makes a good servant, but a lousy master.
When profit becomes the master, however, businesses often ignore or
discount what have been given. The two most significant gifts they receive
and co-create with are nature and family. If they fail to recognize these
gifts, crisis usually follows. Take for example nature. The most basic gift
we inherit is nature. Without the goods of creation, we are bankrupt.
3Matthew 25:14–30.
220 M. NAUGHTON
We have become increasingly aware, although not as fast as we should,
of the demands of the proper stewardship and use of the environment.
The book of Genesis tells us, to “till and keep” creation, but we have
tended to “till too much and keep too little.”4The importance of recy-
cling, reducing carbon and driving out waste, recognizes our dependence
upon nature. Of course, nature does not give its wealth without human
work and its distinctive human qualities of creativity and ingenuity. Yet,
while the wealth of our economy is increasingly coming from the knowl-
edge of workers, businesses will always be beholden to the gift of nature
and of the land.
The other great gift that business receives that enables it to function is
the family. When we praise leaders for their work ethic, we are often indi-
rectly praising their parents. We stand on the shoulders of our families
who have done far more than we know to get us to where we work and
live. If a business is morally sound it is often because the families of those
who inhabit the business are morally sound. What marriage and family
do for people is they provide the social conditions for people to develop.
Family is a primary institution that fosters the common good. They pro-
vide what the sociologist Robert Putnam calls “social capital.” They create
enduring relationships that mutually support its members especially dur-
ing difficult and trying times. They bond people together. They create
the capacity for people to make sacrifices. And despite all their challenges,
they create the stability that supports political and educational institu-
tions all of which feeds into the possibility of an economic system. Yet,
as several scholars have noted, family structure is too often ignored or
discounted when speaking about the economic health of society and in
particular business.5
There are other gifts that businesspeople receive that contribute
to their ability to create wealth such as good laws and government.
Would a Steve Jobs have been able to flourish in North Korea, proba-
bly not. Government plays an important role in establishing just taxes,
4Cardinal Peter Turkson, “Protect the Earth, Dignify Humanity: The Moral Dimen-
sions of Climate Change and Sustainable Development”, delivered at Vatican City,
April 28, 2015, http://www.casinapioiv.va/content/dam/accademia/pdf/turkson.pdf.
Accessed August 21, 2018.
5See the work of Charles Murray, Coming Apart: The State of White America, 1960–
2010 (New York, NY: Crown Forum, 2012).
10 THE MORAL ECOLOGY OF GOOD WEALTH 221
reasonable regulation and healthy incentives to foster wealth creation.
For example, many of the new jobs, which are critical to a healthy busi-
ness sector, usually come, not from well-established companies, but from
entrepreneurial start-ups, small and medium-sized companies, especially
family businesses.6New businesses need entrepreneurs who are willing to
take risks, who have faith in the future, who have access to credit and
who can operate in a reasonable regulatory environment. Good govern-
ment will make all these opportunities to create wealth easier and more
likely.
Wealth Distribution: Justice
and Right Relationships
Wealth creation, however, is only one side of the proverbial wealth coin.
We also need to speak of wealth distribution, and in particular a just dis-
tribution. So, without profit a company dies, but without justice and a
just distribution of wealth a business is organized robbery.7This is seen
in price gouging and fixing, monopolies, hoarding benefits and incentives
to executive leadership, shifting costs onto the poor and future gener-
ations, refusal to pay suppliers or unreasonable extension of payments,
corporate welfare and wage theft, and the list goes on.
Precisely because of the abuse of business in relation to its duty to justly
distribute wealth, too often, however, a just distribution of resources is
seen as only a political function. While the state plays an important role
through regulations and taxation in distributing wealth, the role of busi-
ness as a distributor of justice cannot be ignored. What business, like any
institution, must address is how it establishes “right relationships,” which
6http://sbecouncil.org/about-us/facts-and-data/. Accessed August 21, 2018.
7One of the serious moral debates we are having in our society is whether there is
a “just distribution” of resources. A recent Pew Study rank of concerns for Americans
placed “income inequality” as the number one concern on the list they had (higher %
of democrats; lower % of republicans). This debate is a perennial one. There are few
people in this world who would argue for an equal distribution of income, recognizing
that an unequal distribution of wealth can be morally legitimate. There are also few
people who would justify the current patterns of wealth distribution as morally sound and
legitimate. An important question for us is when does inequality of income and wealth
become immoral and unjust? One dimension of the debate is where does one focus:
wealth creation or wealth distribution.
222 M. NAUGHTON
is at the heart of justice. The Latin root of justice is ius, which means
“right,” and in particular “right relationships.” In Hebrew mišp¯at (jus-
tice) and ¸s˘ed¯aqâ (righteous) in the Old Testament describe the fulfillment
of responsibilities between employer and employee and ruler and people,
as well as God and his people, husband and wife and parent and child.
The key to this right relationship in business is the way wealth is dis-
tributed. Pius XII made the analogy of wealth being like blood in the
human body, it needs to circulate to all the parts in order to make the
whole healthy.8Good wealth depends upon not only its creation but also
a just distribution; where there is a concentration of wealth, there is most
likely clotting causing disease. Business plays an essential role in creating
a just distribution of wealth that both generates authentic prosperity and
alleviates debilitating poverty. When excessive inequality, greater distance
between rich and poor, exceed certain thresholds, regions and countries
become ripe for increasing distrust, alienation, violence, crime and pos-
sible revolution. Business plays an essential role in creating a just distri-
bution of wealth that both generates authentic prosperity, fosters right
relationships and mitigates economic inequities.
As it relates to business, a just distribution calls for wealth to be allo-
cated in a way that creates “right relationships” with those who have par-
ticipated in the creation of such wealth. This virtue raises a set of knotty
and enduring moral challenges for business leaders. Among other things,
businesses need to discern and account for the moral implications of how
they allocate resources to employees (a just wage and compensation as
well as possibilities of employee ownership), customers (just prices), own-
ers (fair returns), suppliers (just prices and fair terms on receivables), gov-
ernment (just tax payments) and the larger community and especially the
poor (philanthropy).9
8Pius XII, Letter Dilecti filii to the German Bishops, October 18, 1949; quoted in
Jean-Yves Calvez and Jacques Perrin, The Church and Social Justice: The Social Teachings
of the Popes from Leo XIII to Pius XII (Chicago: Henry Regnery, 1961), 149.
9These issues raise the moral debate today about rising inequality. While there are
many dimensions to this issue, in the United States one particular element is the alloca-
tion of historically high profit margins to capital and away from labor. Shareholders and
those representing shareholders and in particular senior management saw their incomes
rise faster than labor since the 1990s; whereas labor rates have stalled. The reasons for
this are complex and varied: globalization, technology, financialization of the economy,
decline of unions, deregulation as well regulation of corporate benefits (Washington/Wall
10 THE MORAL ECOLOGY OF GOOD WEALTH 223
One of the most significant, although certainly not the only, ways busi-
nesses address wealth distribution is whether they pay a “just wage.”
The just wage is a complex topic, but its importance in a just distribu-
tion cannot be underestimated. When an employer receives work from an
employee, both participate not only in an economic exchange, but also in
a relationship that is both institutional and personal. This relationship, if
it is to be just, has three convictions that should guide the distribution of
wealth: need, contribution and order.
•Need: For a relationship to flourish in business, an employer must
recognize that employees, by their labor, “surrender” their time and
energy and cannot use them for another purpose. A living wage,
then, is the minimum amount due to every independent wage earner
by the mere fact that he or she is a human being with a life to main-
tain and a family to support. A wage that fails to meet the needs
of an employee (in particular a full-time adult) is a wage that will
struggle to carry the weight of a real relationship.
•Contribution: While the principle of need is necessary for determin-
ing a just wage, on its own it is insufficient, since it only accounts
for the consumptive needs of employees and does not factor in
their productive contributions to the organization. Because of effort
and sacrifice as well as skill, education, experience, scarcity of tal-
ent and decision-making ability, some employees contribute more to
the organization than others, and are due to more pay. An equitable
wage, then, is the contribution of an employee’s productivity and effort
within the context of the existing amount of profits and resources of the
organization.
Street collaborations), etc. The temptation here, however, is to reduce wealth distribu-
tion to merely impersonal forces that need to be technically managed either by greater
deregulation of the market so as to expand the pie or by greater government regulation
to more justly distribute the pie. While market or government solutions are important,
businesses and their leaders need to bring to the table a more robust set of principles in
how wealth is distributed within the organization in a way that is sustainable in a mar-
ket economy. One such solution is to find ways to broaden the ownership of capital so
that more people participate in its benefits—cooperatives and employee stock ownership
plans (ESOPs) are two such forms. Building up ways in which the poor can have wealth
increases their chances of moving and staying out of poverty more than only having them
depend upon income generation (see James P. Bailey, Rethinking Poverty, Income, Assets
and the Catholic Social Justice Tradition [Notre Dame, IN: University of Notre Dame
Press, 2010]).
224 M. NAUGHTON
•Order: Pay is not only income for the worker, but it is also a cost to
the employer, a cost that impacts significantly the economic order of
the organization. Without proper evaluation of the way a living and
equitable wage will affect the economic order of an organization,
the notion of a just wage becomes no more than a high-sounding
moralistic impracticality. A sustainable wage, then, is the organiza-
tion’s ability to pay wages that are sustainable for the economic health
of the organization as a whole.
What makes a just wage complex and difficult is that these three con-
victions are often in tension with others. For example, a tension can exist
between the principle of need and the principle of order. Raising wages to
a livable level especially for those jobs that are unskilled can put the eco-
nomic sustainability of a business at risk. The key to resolving the tension
is by invoking the principle of contribution. Three conditions of relation-
ship are necessary to come to a fruitful resolution. What business leaders
resist is the all too common attitude of passively delegating their responsi-
bilities simply to the mechanical force of labor markets. As managers they
are moral agents, distributors of justice, not mere market technicians.
Yet, we need to be clear here that businesses are not responsible to
pay employees more than a sustainable wage (a wage consistent with the
sound financial management of the firm), even if that wage falls below a
living wage. To do so would unjustly place businesses—and all the firm’s
employees—at risk of economic failure. In a market economy, no organi-
zation can be obligated to pay without regard to labor costs’ effect on its
competitive position, since that would amount to an imprudent choice,
leading possibly to economic failure for the business. To “impose justice”
in this manner is doomed to long-term failure.
Wealth Dispersion: Charity and the Logic of Gift
The charitable function of wealth is in many respects the most excellent of
the three functions of wealth, since it is in the charitable function that we
get at the underlying logic of gift that defines for us what “good wealth”
is. It is also the logic of gift that has power to order the logics of the
market (incentives) and the contract (rules and procedures) and prevent
their disordering practices.
Unfortunately, charity has received such a bad name, in part because
of people like Carnegie and others whose charitable giving off the backs
10 THE MORAL ECOLOGY OF GOOD WEALTH 225
of labor taints the charity. The lawyer, for example, who does mergers
and acquisitions during the day that leads to layoffs and then does pro
bono work in the evening for women who have been beaten by their
laid-off husbands should at least create an unease of the justice of work
and charity of volunteering.
This tension and even contradiction between justice and charity has
created a long line of critics of charity who are concerned that charity is
used as a substitute for justice. They characterize charity as paternalistic by
combining pity with power creating relationships of the giver as superior
and the receiver as inferior. Such criticisms are real and have legitimate
validity. Unfortunately, they often dismiss charity and fail to recognize its
power. In doing so they sever themselves from the power of charity, and
when they do, their justice grows cold. What is needed here is a robust
notion of charity that complements and fulfills justice.
The problem with charity is not that there is too much of it but too
little. “There is little justice in the world because there is little charity in
the world and there is little charity in the world because there is little God
in the world.”10 Charity goes beyond justice, but it never lacks justice.
The two are inseparable from each other and when they are disconnected
both are damaged. Pope Benedict put it this way:
On the one hand, charity demands justice: recognition and respect for the
legitimate rights of individuals and peoples. It strives to build the earthly
city according to law and justice. On the other hand, charity transcends
justice and completes it in the logic of giving and forgiving. The earthly
city is promoted not merely by relationships of rights and duties, but to
an even greater and more fundamental extent by relationships of gratu-
itousness, mercy and communion. Charity always manifests God’s love in
human relationships as well, it gives theological and salvific value to all
commitment for justice in the world.
What charity should always help us to understand is, that we have first
been gifted so much in life and that our giving needs to reflect the gift
that has been received. As Jesus states “From everyone who has been
given much, much will be demanded; and from the one who has been
entrusted with much, much more will be asked” (Lk 12:48). Ultimately,
10 From the Introduction by Peter J. Howard in Fulton Sheen, Justice and Charity
(TAN Books, 2016), 3.
226 M. NAUGHTON
one of the principal failures of mainstream business theory and practice is
to see capital as a form of property that has a social and spiritual nature,
and labor as a form of work that has moral and spiritual meaning. Without
this idea of gift and where it comes form and who gives the gift, business
will always be prone to utility maximization based on individual interests.
Josef Pieper argued that the key to the moral and spiritual crisis of
modern society is the refusal to accept such a gift. He explained that
there is “the strange propensity toward hardship that is engraved into the
face of our contemporaries as a distinct expectation of suffering.”11 He
asks whether this propensity toward work, toward career, toward achieve-
ment, toward technology is perhaps the deepest reason for the “refusal to
accept a gift, no matter where it comes from?”12 Havewelosttheabil-
ity to receive gifts? Are we unable to think with a logic of gift? Have we
deluded ourselves into thinking that everything is acquired, earned and
achieved?13
Benedict as well as Pieper are getting at this modern problem by
helping us to see how this dynamic between receiving and giving must
be informed by charity. Benedict defines charity as “love received and
given.”14 The phrase is the beginning of what we mean by a “logic of
gift.” This logic of receiving and giving is like the inhaling and exhal-
ing of life. It begins to describe the dynamic relationship between the
contemplative and active life within the person, which informs the nature
of relationships that are first and foremost expressed in family and faith
communities, but also informs work communities. Before addressing the
issues in relation to current business thinking, I want to highlight three
particular claims that this dynamic and complex operation of receiving
and giving brings with it, and how these claims inform how we under-
stand the business through a logic of gift.
11 Josef Pieper, An Anthology, 138. See Leisure the Basis of Culture (South Bend, IN:
St. Augustine’s Press, 1998), 19.
12 Josef Pieper, An Anthology, 139. See also Jacques Godbout’s discussion of the
premises of Alcoholics Anonymous, namely, that the alcoholic “cannot solve his or her
problem alone, and must recognize that the capacity to find a solution comes from
outside, from a gift bestowed by a superior force” (The World of the Gift [Montreal:
McGill-Queen’s University Press, 1998], 69).
13 See Pieper Leisure the Basis of Culture, chapter II. Pieper sees this inability to receive
as both an ethical and epistemological problem. He explains that Kant’s notion of knowl-
edge work plays a destructive role in this significant problem of not receiving.
14 Caritas in veritate,5.
10 THE MORAL ECOLOGY OF GOOD WEALTH 227
The first claim is that love as a dynamism of receiving and giving strikes
at the heart of how we develop as persons. In the first sentence of his
encyclical, Caritas in Veritate, Benedict explains that this charity “is the
principal driving force behind the authentic development of every person
and of all humanity.”15 These two fundamental dimensions of our lives,
of receiving and giving, of contemplation and action, of rest and work
are not simply two isolated periods of time in human life, but rather they
are, as Karl Rahner S.J. explains, “moments in a person’s self-realization
which exist only in their relation with one another and are the primary
constituents of human existence itself.”16 The point here is that love is
not only an act of giving but also receiving and this act of receptivity, of
rest, contemplation, prayer, worship plays an essential role in the integral
development of the person. This will be explained in more detail in the
next two sections.
The second claim, which is of critical importance to highlight in our
current situation is that the receiving dimension of this charity has a cer-
tain primacy. The structure of this love “expresses the primacy of accep-
tance over action, over one’s achievement.”17 David Schindler expresses
this well: “When we first experience our being as created, as being gifted
life, this receiving enables us to see our doing and having … as ways of
giving which they are meant to be.”18 This is why Benedict, as Cardinal
Ratzinger, states that the person “comes in the profoundest sense to him-
self not through what he does but through what he accepts,” not through
what he achieves but what he receives.19
The third claim, which builds upon the prior two claims, is that if this
deep receptivity fails to animate organizational life, that place where we
give of ourselves, we will find ourselves in a disordered relationship in
every exchange. This is why Benedict explains that “[t]he great challenge
before us … is to demonstrate, in thinking and behavior … that in com-
mercial relationships the principle of gratuitousness and the logic of gift
15 Caritas in veritate,1.
16 Karl Rahner, “Theological Remarks on the Problem of Leisure,” Theological Investi-
gations, vol. IV. trans. Kevin Smyth (Baltimore: Helicon Press, 1966), 379.
17 Joseph Ratzinger, Introduction to Christianity, trans. J.R. Foster (San Francisco:
Ignatius Press, 1990), 266.
18 David Schindler, “Christology and the Imago Dei: Interpreting Gaudium et spes,”
Communio 23 (Spring 1996): 159.
19 Joseph Ratzinger, Introduction to Christianity, 266. See also Caritas in veritate, 52.
228 M. NAUGHTON
as an expression of fraternity can and must find their place within normal
economic activity.”20 It is actually this logic of gift that illuminates the
blind spots of businesses creation and distribution.
Charity “makes room” and provides space for a “logic of gift” that
orients people in business to deeper levels of communion, solidarity and
fraternity.21 When charity and its logic of gift is muted or discounted
certain distortions begin to seep into the creative and distributive func-
tions of Wealth. In terms of the creative function, the businessperson is
tempted to see only their achievement of wealth creation in terms of their
own effort. The term wealth creation, however, is a bit of a misnomer
since we as humans never really create anything, but what we do is trans-
form what has already been given. Only God creates ex niliho, “out of
nothing.” Everything that we have is gift. We simply utilize in creative
and innovative ways what has already been given. In our creativity, we
reflect the image of the creator God we have been made in.
One interesting practice that embodies this charity in business is cor-
porate giving. This activity has a particularly long tradition in the state
of Minnesota. Many know that the Target Corporation donates approxi-
mately 5% of its pretax operating profit and is consistently ranked as one of
the most philanthropic companies in the US. What some may not know is
where this tradition comes from, which moves us to the virtue of charity.
Target’s original impulse for this practice started with its founders in
the nineteenth century, and in particular George Draper Dayton who
wrote “there’s a divinity that shapes our lives” and for whom tithing part
of his profits for the poor was a biblical command and not a corporate
strategy for public relations to generate greater profit.22 Influenced by
the biblical vision of the world and his Presbyterian upbringing, the fruits
20 Caritas in veritate, 36.
21 Caritas in veritate, 34, 37. “Space also needs to be created within the market for
economic activity carried out by subjects who freely choose to act according to principles
other than those of pure profit, without sacrificing the production of economic value
in the process. The many economic entities that draw their origin from religious and
lay initiatives demonstrate that this is concretely possible” (37). See for example the
companies associated with the Economy of Communion, family businesses, cooperatives,
entrepreneurial ventures, and other types of firms inspired by faith, etc. These communities
of persons are not without their contracts and economic rationality, but these realities do
not exhaust the meaning of such communities.
22 Wilfred Bockelman, Culture of Corporate Citizenship: Minnesota’s Business Legacy for
the Global Future (Lakeville: Galde Press, 2000), 34.
10 THE MORAL ECOLOGY OF GOOD WEALTH 229
of his work were not his own but God’s and the implication was that
part of those fruits went to the poor. Dayton’s self-understanding was
grounded in a profound notion of wealth that had spiritual and moral
claims to it.
The founders of Reell Precision Manufacturing had a similar conviction
and they also tithe their profits at 10% of pretax earnings. Several years
ago Reell established a yearly service trip to the Dominican Republic (DR)
working with a local church and a local Dominican couple to establish a
campus with a school dining hall, playground and chapel. Every February
for the past six years, approximately 15–20 coworkers spend a week in
the DR. There is much to say about the program, but I want to highlight
the logic that drives it and the collateral goodness that comes from it that
impacts in a powerful way the creative and distributive functions within
Reell.23
First, for Reell, the 10% of pretax profits are not spent because the
leadership team thinks such spending will generate ever greater profitabil-
ity or greater retention or some other instrumental benefit. It is done
out of principle of the tithe, which states that the first fruits are given to
those who go without. While some companies may give to charities out
of a purely instrumental rationale, such instrumental thinking will often
eventually do damage to the actions. Such calculated rationality pollutes
the act even though the act will have great benefits. T. S. Eliot once put
it “The greatest treason is to do the right deed for the wrong reason.”
While few of us ever have completely pure intentions, our motives matter,
especially over time, and they either move to a more narrowly self-focused
quid pro quo exchange or they move to a more generous openness to the
other.
Second, serving the poor together in the DR has served as a school of
servant leadership. When board members, the CEO, mid-level managers
and assembly line persons are working side by side digging ditches, visit-
ing homes of local Dominicans, hearing about their situations and then
reflecting upon their experiences, they immerse themselves in a situation
that increases the chances to touch the heart. Servant leadership as an
abstract principle is often difficult to understand in words. It needs to be
experienced in order to be understood.
23 See Michael Naughton and David Specht, Leading Wisely in Difficult Times: Three
Cases on Faith and Work (co-author David Specht), Paulist Press, Fall 2011. For full
disclosure, I am the chairman of the board of directors for Reell.
230 M. NAUGHTON
Third, there is always a collateral goodness to tithing, although the
exact nature of that goodness can be unexpected. As John Henry New-
man put it, “the good is always useful but the useful is not always good.”
The collateral goodness of the trip has had a positive impact on the cul-
ture of the organization in multiple ways. In particular it has brought
unity to longer tenured members of the company with newer coworkers.
With new leadership in the company, there were longer tenured cowork-
ers who felt that leadership did not “get” the mission of the company. The
trip brought both new and old together, which began to bridge the gap.
It has brought stronger relationships with those coworkers who work in
the different facilities in the Netherlands, China and the USA. It has also
had a significant impact on those Dutch coworkers who tend to see char-
itable works more the responsibility of the government rather than the
corporation. All of these connections have strengthened the relationships
among coworkers that has created teambuilding, retention of coworkers
and attracts new workers.
Fourth, the spiritual gifts received and connections made are beyond
measure. After seven years of trips, there is a community of Dominicans
who not only pray and fast for the project, but they pray for the individ-
ual coworkers and for the company as a whole. This relationship between
Dominicans and Americans has brought a spiritual dimension that is cap-
tured by Benedict’s notion of fraternity:
As society becomes ever more globalized, it makes us neighbors but does
not make us brothers. Reason, by itself, is capable of grasping the equality
between men and of giving stability to their civic coexistence, but it cannot
establish fraternity. This originates in a transcendent vocation from God
the Father, who loved us first, teaching us through the Son what fraternal
charity is.24
Such spiritual and relational intimacy the moves people into a familial rela-
tionship of brothers and sisters in business-related community outreach
projects will make most executives uneasy. And it should. Intimate rela-
tionships can easily disorder and unrealistic expectations can come from
either side. Reell, for example, has been very clear with the Dominicans
that there are limits of what they can do and that the ultimate end of
24 Caritas in Veritate, 19.
10 THE MORAL ECOLOGY OF GOOD WEALTH 231
the project is to get to a place where Dominicans are self-supporting. But
the spiritual relationship has been one of the surprises of the project. It
natural emerged rather than orchestrated.
Finally, a brief note on the relationship and tensions among the char-
itable, creative and distributive functions of good wealth. First, in rela-
tion to creation. If the company does not create wealth, it cannot give
it away. Since implementing the DR project, the company’s profit have
been extremely healthy. This does not mean that economic challenges
will not return to the company, but as profound as the charity giving
has been, it is dependent upon profit. To be a profitable and well-run
company you have to have the right people in the organization. In the
span of these seven years, the CEO and the Vice President of Coworker
Services (human resources) has had to let several people go for various
reasons including some key leadership positions who have actually been
on the DR trip. It is not easy to fire someone who you have worked arm
in arm on such a charitable cause. But if coworkers are not contribut-
ing to the overall good of the company, leadership must first attempt
to help toward that goal and if it does not work, they must let them
go.
Second, not all coworkers of the company have been committed to
the project and some have even expressed that the company tithe should
be eliminated and redistributed to them. While this is less of a problem
today than it was seven years ago, coworkers can be just as self-interested
as shareholders and executives. Self-interest ordered toward one’s own
wealth maximization damages culture. It highlighted the importance for
executives that charity was not fully incorporated in the culture of the
company. In those seven years, however, the DR project has been one
of the most important activities of contributing to what it means to be
charitable not only to the poor but to each other. Coworkers and those
board members who go to the DR first experience a deep sense of what
has been given to them. They are thinking not that they should have
more, but they experience a deep sense of gratitude. In that gratitude,
then, is a welling up of a desire to give. Charity is a love of receiving and
giving and it becomes a habit not only with those in the DR, but in the
business back in Minnesota. Charity purifies wealth and makes it good by
reminding us of where it ultimately comes from.
232 M. NAUGHTON
Conclusion
One of the principal challenges of modernity is a divided life that frag-
ments a moral ecology that frustrates moral and spiritual meaning, deeper
relationships and a unity of life. With regard to wealth, we are prone to
fragment its creative, distributive and charitable functions into discrete
separate units. If we are to generate good wealth, we need to create as
good stewards, distribute as agents of justice and give it away as charita-
ble lovers. But these are not three distinct and separate virtues but they
mutually inform each other in a way that generates what this paper has
called a moral ecology. This moral ecology is premised on virtues that are
related to another and if one is missing the other begins to become disor-
dered. This is what people like Aquinas and others call the “unity of the
virtues.” So what makes “good wealth” good is precisely the virtues of
a moral ecology that fosters an interdependent and organic relationship
among its creative, distributive and charitable dimensions. One dimension
is related to other which is why it is not helpful to juxtapose wealth cre-
ation and wealth distribution or charity and justice. Once we are in this
frame of mind we are outside of a moral ecology and have fallen tramp to
what Alasdair MacIntyre has called compartmentalization, where contem-
porary social life is separate “into distinct spheres, each with its own highly
specific standards of success and failure, each presenting to those initiated
into its particular activities its own highly specific normative expectations,
each requiring the inculcation of habits designed to make one effective in
satisfying those particular expectations and conforming to those particular
standards.”25 The principal challenge is not dividing these three areas of
creation, distribution and charitable but providing a social vision of how
they are related. As expressed in this paper, this is not an easy work and
it behooves us to open ourselves to deeper connections among the three
functions of wealth. Within this moral ecology, we can begin to see our
blind spots not in a judgmental moralistic way, but in a way of humility
of receiving the deeper truths of our humanity and our world.
25 Alasdair MacIntyre, “Moral Philosophy and Contemporary Social Practice: What
Holds Them Apart?” The Tasks of Philosophy. Selected Essays, vol.1(Cambridge:Cam-
bridge University Press, 2006), 117.
10 THE MORAL ECOLOGY OF GOOD WEALTH 233
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Name Index
A
Addams, Jane, 178,179
Akram, Tanweer, 1,75
Aristotle, 53,54
B
Barber, II., Reverend William, 191
Becker, Carl, 124
Benedict, Pope, 225–227,230
Berkeley, George, 5,111,112,
114–116,123,183
Bilgrami, Akeel, 4,5,8,70
Bradley, Anne, 4,7
Brooks, Cornell William, 191
Bryan, William Jennings, 180
Butterfield, Herbert, 108,124
C
Cameron, Andrew, 177,178
Carnegie, Andrew, 174,217,218,
224
Carter, Heather, 6,8,173,177
Chavez, Cesar, 186
Clark, Henry, 8
Costabile, Lilla, 9
D
Dawson, Christopher, 108,126
De Tocqueville, Alexis, 16
Du Bois, W.E.B., 180,186
F
Friedman, Milton, 50
G
Gandhi, Mahatma, 4,5,53–56,63,
65,67–70,72
Gay, Peter, 125
Gerth, Karl, 5,8,75,79,84,89,93
Grudem, Wayne, 32
H
Hardin, Garret, 61
Hayek, F.A., 32,42,43,47,50
Huerta, Dolores, 186
Hume, David, 54,109,125
© The Editor(s) (if applicable) and The Author(s) 2020
T. Akram and S. Rashid (eds.), Faith, Finance, and Economy,
https://doi.org/10.1007/978- 3-030-38784-6
235
236 NAME INDEX
K
Kaiser, Wolfram, 10
Kai-shek, Chiang, 80
Keynes, John Maynard, 42,125
King, Jr., Reverend Martin Luther,
186,191
Kuhn, Thomas, 65
Kutty, Faisal, 6,8,129,131
L
Lange, Oscar, 42
Lerner, Abba, 42
Locke, John, 18,58–61,63,66,71,
72
M
Marx, Karl, 16,55–57,59,64–66
McDaniel, Justin Thomas, 9
McDowell, John, 53
McDowell, Mary, 178
Menger, Carl, 43
Miller, David, 7,8,197
Mises, Ludwig von, 32,41–43
N
Naughton, Michael, 7,8,215,229
Neal, Larry, 9
Nestor, Agnes, 178
O
Ostrom, Elinor, 62
P
Palmer, Tom, 8
Pieper, Josef, 226
Post, Emily, 197,200,211
Putnam, Robert, 220
R
Rashid, Salim, 5,6,8,107,110,119
Rauschenbusch, Walter, 181–183,186
Rawls, John, 16,17
Roosevelt, President Franklin D., 183
S
Samuelson, Paul, 42
Sen, Amartya, 26,56,57,72
Sider, Ronald, 15
Singer, Peter, 16
Swift, Jonathan, 5,6,111–120,123
Swing, David Reverend, 176,177
T
Tawney, R.H., 125,126
Tucker, Josiah, 5,110,111,113,
121–123,126
W
Wallace, George, 189
Washington, Booker T., 180
Weber, Max, 11,138
Whitehead, Alfred North, 2,11
X
Xiaoping, Deng, 91,99,100
Z
Zedong, Chairman Mao, 79,80,90
Subject Index
A
Abrahamic, 8
Alienation, 53,55,56,61,66,68–71,
222
Austrian School of Economics, 32,43
B
The Big Three, 83–86,99
Bourgeois consumerism, 78,79,87,
89,91
C
Canada, 6,131,132,134,135,159
Capitalism, 5,11,22,24,42,56,58,
76,79,80,84,91,99,100,126,
132,174
Catholic social teaching, 184,215
Charity, 8,9,216–218,224–232
China, People’s Republic of (PRC),
78–82,85,87,89–91,100
Christianity, 6–10,48,54,101,
108–110,114,124–126,138,
175,178–181,184,188,190
Christ, Jesus, 37,38,179,183
Cold War, 64,79,80,90,186,188,
189
Communist Revolution (China) of
1949, 5,75,78,79
Congregationalist Church’s Council
for Social Action, 187
Congress of Industrial Organizations,
184,185
Consumerism, 4,5,75–79,81–88,
90–93,98–101
Cultural Revolution (1966-1976), 93,
96
D
Dicastery for the Promotion of
Integral Human Development,
217
Diversity and Inclusion (D&I),
204–207
Dominican Republic (DR), 229,231
E
Eastern Europe, 90
© The Editor(s) (if applicable) and The Author(s) 2020
T. Akram and S. Rashid (eds.), Faith, Finance, and Economy,
https://doi.org/10.1007/978- 3-030-38784-6
237
238 SUBJECT INDEX
England, 56,57,59–61,111,116,
124–126
Equality, 4,5,25,55,56,63–67,69,
107,230
Ethics, 2–4,7,8,10–12,53,68,108,
109,141,148,201,205,210,
220
European Union (EU), 10,110
F
Faith, 1–12,19,58,107,108,121,
122,124,131,149,157,163,
165,175,189,190,199–212,
221,226,228
Faith-avoiding, 204,205
Faith-based, 2,8,164,203,205
Faith-friendly, 7,203,205–207,212
Faith-tolerant, 205
Fatwa,153,154,158
G
Genesis, 4,31,32,37,42,220
Getihu (self-employed, household-run
business), 92–99
Gharar,136,139–141
Gift, 32–34,39,43,45,46,83,85,
98,217,219,220,224–228,230
Gilded Age, 6,174,175,181,182,
184,186
God, 4,10,18–23,27,28,31–40,
42–46,48,117,118,121,131,
154,179,181,184–187,189,
190,192,222,225,228,229
Good wealth, 6,7,215–219,222,
224,231,232
H
Haram,136,141,143
Hinduism, 54
I
Ijarah,134,142,144,147,148
India, 2,24,54,56,57,88
Industrialization, 5,75,76,82,84,
85,87,100
Inequality, 5–8,11,24,25,64,65,
69,82,87,173–177,183,184,
187,189–192,221,222
The Integration Profile (TIP) Faith
and Work Integration Scale, 209,
212
International Monetary Fund, 25
Ireland, 111,112,114–116,122
Islam, 9,132,133,141,152,154,
165
Islamic finance, 6,9,129–137,
139–144,148–151,153–159,
161–165
Istisna,142,146–148
J
Judaism, 138
L
Libertarianism, 6,189
Liberty, 5,50,55,56,63–69,71,
116
M
Markets, 4,15,16,23,24,26,
40,42,43,45–50,78,82–84,
88–91,94,98–100,108,115,
118,122,123,131,133–135,
143,146,155,156,187,203,
218,223,224,228
Materialism, 91
Maysir,136,139
Moral ecology, 215,216,219,232
Mudharabah,142,144–146,148
Muhammad, Prophet, 132,137
Murabahah,142,143,151
SUBJECT INDEX 239
Musharaka,130,142,145,146,148
N
National Association of Manufacturers,
187
National Catholic Welfare Conference,
182,185
Nationalist Party (KMT), 80
Netherlands, 230
New Deal, 183,184,187
New Gilded Age, 6,7,173,176,191,
192
New social teachings, 6,8
“New China”, 79,96
Normative framework, 4,15–18,
22–24
O
Oikonomia,32,37,38
Old Testament, 17–21,35–37,222
P
Perceptual understanding, 71
Political Enlightenment, 55,67
Profit-loss sharing, 6,45,47,142,
144,146,148,150,164
Proselytizing, 203
Q
Qimar,136,138,139,141
R
Rationality, 53,57–60,63,67,72,
228,229
Reell Precision Manufacturing, 229
Religious accommodation, 202,203
Religious harassment, 203,205
Riba,129,136,137,141,142,152
S
Shalom, 32,35–37,39
Shariah, 158
Social Christianity, 175,183,184,
190,191
Socialism, 5,22,42,56,75,78–80,
82,83,85–88,90,95,99,100,
132,183
Soviet Union, 42,49,90,188
State consumerism, 87–89
Sukuk,142,147,148
Sunnah,132,137
T
Takaful,142,147,148
Targ et, 228
Three Big Ticket Items, 83
Thrivent, 2,3
U
United States, 3,6,24,25,80,134,
135,139,140,159,174,177,
183,185,187,200,222
Usury, 136–138,152,165
V
Vatican’s Pontifical Council for Justice
and Peace. See Dicastery for the
Promotion of Integral Human
Development
Vocation of the Business Leader, 216,
217
W
Wealth creation, 4,217,219,221,
228,232
Wealth distribution, 217,221,223,
232
