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Jim Wallis, Davos Capitalism, Cronyism, and the ‘New Social Covenant’

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Sojourners’ Jim Wallis has been at the Davos gathering in Switzerland and is urging us to be guided by a new Davos “covenant.” If you’ve never heard of Davos, Michael Miller’s RealClear Politics piece “Davos Capitalism” describes the gathering and its unassailable hubris this way:

Davos capitalism, a managerial capitalism run by an enlightened elite–politicians, business leaders, technology gurus, bureaucrats, academics, and celebrities–all gathered together trying to make the economic world smarter or more humane…. And we looked up to Davos Man. Who wouldn’t be impressed by the gatherings at the annual meeting of the World Economic Forum at Davos, a Swiss ski resort? Sharply dressed, eloquent, rich, famous, Republican, Democrat, Tory, Labour, Conservative, Socialist, highly connected, powerful and ever so bright.

Then, when the whole managerial economy collapsed, the managers and technocrats lost faith in markets. But they did not lose faith in themselves, and now they want us to entrust even more of the economy to them.

As if on cue, Jim Wallis writes in a recent public letter:

This week at the World Economic Forum in Davos, Switzerland, we are looking to the future and asking “what now?” At a Saturday session — “The Moral Economy: From Social Contract to Social Covenant” — a document will kick off a year-long global conversation about a new “social covenant” between citizens, governments, and businesses.

Why dispense with the yeomen-like “contract” language in favor of a new “social covenant”? Wallis explains that “in the past 20 years, the world has witnessed the death of social contracts. We have seen a massive breakdown in trust between citizens, their economies, and their governments…. Former assumptions and shared notions about fairness, agreements, reciprocity, mutual benefits, social values, and expected futures have all but disappeared. The collapse of financial systems and the resulting economic crisis not only have caused instability, insecurity, and human pain; they have also generated a growing disbelief and fundamental distrust in the way things operate and how decisions are made.”

Greed and unscrupulousness was part of the mix, of course, but we’ve had these in the mix ever since Adam and Eve took the bite from the forbidden fruit. What we got more and more of in the past few decades is the kind of big, top-down Davos planning that helped precipitate the economic crisis.

During that period, European governments promised ever more lavish union wages, pensions and fringe benefits until many Euro-zone economies began collapsing under the sheer, unsupportable weight of it all.

Meanwhile, in the United States, Washington policy makers were pursuing top-down and Keynesian schemes to spread home ownership to more and more American citizens through a combination of government interest-rate manipulation and policies that coerced mortgage companies to issue home loans to people with terrible credit records. Together, these policies fueled a housing bubble as people rushed to get loans for homes they couldn’t afford in a “sure fire” housing economy fueled by artificially cheap credit and artificially cheap access to that credit. When the bubble generated by these Davos-style schemes finally burst (as economic bubbles inevitably do), the Davos crowd rushed to blame the free market and now are talking about the need for a new social covenant, which is mostly just more of the same top-down, redistributive “social justice” that hurried us into the present fix.

Certainly there were rich capitalists who behaved badly in the run-up to the economic crisis, and many of them were at meetings like the Davos Forum making sure they were plugged into all of the latest big-government crony capitalist schemes. This “new social covenant” makes an admirable call for greater virtue in public life, but it overlooks the fact that as governments gain greater and greater power to control and regulate the economy–to pick winners and losers–the more fuel there is for corruption as politicians and corporations find all kinds of new opportunities for trading favors.

The Davos statement begins with language it would be difficult for any reasonable person to argue with: “The dignity of the human person,” the “common good,” a “need for stewardship,” a due regard “not just for ourselves, but for posterity.” But when you scratch the surface, you find more of the same calls for top-down, big government redistribution and economic planning.

As a Christian, I find covenant language genuinely appealing. But talking about covenants, dignity, stewardship, the common good and posterity while peddling more of the same centralized, bureaucratic, government-corporate partnerships that led to the mess in the first place is only a recipe for a bigger political and economic mess–the common bad, if you will.

Jonathan Witt


  • You are so so right:

    as governments gain greater and greater power to control and regulate
    the economy–to pick winners and losers–the more fuel there is for

    Each and every call for more gov’t is, in practice, a call for more corruption.

  • Wallis fails theologically here. A covenant, by Biblical definition, must be cut.
    There must be one who bleeds in the establishment of a covenant.
    Who is Wallis recommending bleed?
    Wallis also fails in constitutional political economy. To some extent governments can be established for the purpose of providing public goods. That is the productive state, as James Buchanan would say. Of course, Ronald Coase doubts whether there are any public goods which require a productive state to produce them, and he’s been around long enough to look around for one, longer even than Buchanan was.
    But the primary purpose of constitutions was not for the state to make a promise of providing positive goods for its citizens, but for the provision of a negative good, that is keeping of the peace, and the framework of constitutionalism in achieving this has been successful because it constrains the state in its performance of this task.
    Constitutions are an agreement by the state that it won’t step outside of the bounds the people set for it.
    When we see the state as savior, as the primary vehicle for provision of public goods which rightly ought to be the mandate of Christians, it becomes easy to apply the language of covenant which should be reserved for individual sacrificial love in action.
    However, inasmuch as believers fail to be faithful in exercising mercy and grace sacrificially, we leave all of society vulnerable to tyranny.

  • RogerMcKinney

    Wallis is an old fashion Marxist who despises economic science, calling it the “gospel of scarcity”. Like Marx, he doesn’t discuss any topic in good faith but assumes that anyone who disagrees with him is only promoting his class interests. Also, he is not evangelical as he claims. Follow his theology for a while and anyone can see he does not believe the fundamentals of traditional Christianity. I suspect that he believes Jesus’ full mission was to relieve the poor of material poverty and nothing else.

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