Posts tagged with: market economy and ethics

Beginning today, the conference “Religion and Liberty — A Match Made in Heaven?” gets underway in Jerusalem. Sponsored by the Jerusalem Institute for Market Studies (JIMS), the Acton Institute and others, the event asks questions such as, “Is capitalism not only efficient but also moral?” In conjunction with this May 20-24 conference, Acton is offering its two Jewish monographs through Amazon Kindle at no charge.

The two titles:

  • Judaism, Law & The Free Market: An Analysis by Joseph Lifshitz. [Kindle link]
  • Judaism, Markets, and Capitalism: Separating Myth from Reality by Corinne Sauer and Robert M. Sauer [Kindle link]

Also see the Sauers’ 2007 Acton commentary, “Jewish Theology and Economic Theory.”

In the conference description, JIMS notes that “several speakers will discuss why Israel — in fact no country — should grant special privileges to religious institutions, nor subsidize religious activities. While few would advocate this approach for our Jewish state, there will be compelling arguments made about why religious communities in Israel would flourish with less government support. On Tuesday we will discuss how free markets enable religious communities to conveniently observe their traditions. There also will several panels which will provide the philosophical foundation for freer markets in Israel. More importantly our speakers will explain why free market policies will break down Israel’s oligarchical institutions that impose high product prices on Israelis and limit economic opportunity.”

In addition to JIMS and Acton, the Jerusalem conference is sponsored by the Becket Fund for Religious Liberty, the Atlas Network and Maarah Magazine.

Acton now has a dozen or so eBook offerings on social thought understood through a religious lens. For a listing of titles, please visit this page.

In the Grand Rapids Press, reporter Ann Byle interviews Acton’s Michael Miller about a live, national webcast on Sept. 24 of the Colson Center’s “Doing the Right Thing: An Exploration of Ethics.” Byle notes that the webcast “features a live panel discussion with [Chuck] Colson, experts Del Tackett, Robert George, John Stone-street and host Eric Metaxas. Grand Rapids-based Acton Institute’s Michael Miller also will participate as a panelist, thanks to his work as a research fellow and expert on the intersection of business and ethics.” Miller says:

‘Doing the Right Thing’ is building the case for thinking seriously about ethics and doing the right thing. I’ll specifically address how we think seriously about ethics in the business world and how we apply our moral sense in making business decisions.

Read more about it in “Grandville Baptist Church to host national webcast on ethics” in the Grand Rapids Press.

You can purchase the “Doing the Right Thing” curriculum from the Acton Bookshoppe here.

For those in the West Michigan area, some details on the church event:

Doing the Right Thing: An Exploration of Ethics

What: Live webcast shown at 300 locations around the country
When: 9:30 a.m. to 1:30 p.m. Sept. 24
Where: Grandville Baptist Church, 4325 40th St. SW
Details: Local event is free, but registration is required at grandvillebaptist.org. Visit doingtherightthing.com for additional information.

Here’s today’s offering from Jim Wallis’ Rediscovering Values for Lent on the Sojourners website:

Today, instead of statues, we have hedge funds, mortgage-backed securities, 401(k)s, and mutual funds. We place blind faith in the hope that the stock indexes will just keep rising and real estate prices keep climbing. Market mechanisms were supposed to distribute risk so well that those who were reckless would never see the consequences of their actions. Trust, security, and hope in the future were all as close to us as the nearest financial planner’s office. Life and the world around us could all be explained with just the right market lens. These idols were supposed to make us happy and secure and provide for all our needs. Those who manage them became the leaders to whom we looked, not just for financial leadership, but direction for our entire lives. That is idolatry. (page 29).

Last month, Fidelity Investments reported that the average 401(k) balance reached a 10-year high at the end of 2010 — two years after the financial crisis and recession. It also pointed out that “the majority (53%) of participants in 401(k) plans … earning between $20,000 and $40,000 do participate, and 71 percent of participants earning $40,000 and $60,000 participate.” That’s a lot of lower-income idolatry.

This is not a picture of the stock market

According to a report (issued in 2008) by the Investment Company Institute and the Securities Industry and Financial Markets Association, “ownership rates for equities and bonds across U.S. households grew dramatically between 1989 and 2001, but have since tapered off. In the first quarter of 2008, 47 percent of U.S. households (54.5 million) owned equities and/or bonds. The overall ownership rate in 2008 is still much higher than it was in 1989.” The report noted that “ownership of these investment assets has declined since 2001, as increasing market volatility has reduced Americans’ tolerance for risk.” But, most likely, those investment funds will be saved somewhere or moved into lower risk vehicles.

Of course, if you are afraid that investing in the stock market, a mutual fund, a money market account, etc., makes you an idol worshipper, the cure would be to stuff your cash into the mattress or bury it in a coffee can. But would that be good stewardship?

Blog author: jcouretas
posted by on Monday, April 5, 2010

First Principles, the excellent Web-based resource from the Intercollegiate Studies Institute, has posted another “classic” from its extensive archive of journal articles, this one by Wilhelm Roepke. I’m snipping a kernel from “The Economic Necessity of Freedom” (Modern Age, Summer 1959) because it so succinctly and powerfully sums up why a moral framework — and our “highest values” — are necessary for a market economy that is not only efficient, but humane. These values flow out of the “classic-Christian heritage of Europe” and are rooted, for Roepke, in an orthodox Christian anthropology.

… I came to see that socialism did not have the cure for our social ills, that indeed socialism was a heresy which aggravated these ills the more men acted on it. The economic “orthodoxy” according to which I adjudged socialism a heresy was historical liberalism, and with this liberalism I am quite willing to take my stand. What such liberalism advocates in the economic realm can be very simply stated. It holds that economic activities are not the proper sphere of any planning, enforcing, and penalizing authority; these activities are better left to the spontaneous co-operation of all individuals through a free market, unregulated prices, and open competition.

But there is more to the matter than the advocacy of a certain economic technique. As an economist, I am supposed to know something about prices, capital interests, costs, and rates of exchange, and all of them supply arguments for free enterprise; but my adherence to free enterprise goes to something deeper than mere technical grounds, and the reason for it lies in those regions where each man’s social philosophy is ultimately decided. Socialists and nonsocialists are divided by fundamentally different conceptions of life and life’s meaning. What we judge man’s position in the universe to be will in the end decide whether our highest values are realized in man or in society, and our decision for either the former or the latter will also be the watershed of our political thinking.

Thus my fundamental opposition to socialism is to an ideology that, in spite of all its “liberal” phraseology, gives too little to man, his freedom, and his personality; and too much to society. And my opposition on technical grounds is that socialism, in its enthusiasm for organization, centralization, and efficiency, is committed to means that simply are not compatible with human freedom. Because I have a very definite concept of man derived from the classic-Christian heritage of Europe in which alone the idea of liberty has anywhere appeared, because that concept makes man the image of God whom it is sinful to use as a means, and because I am convinced that each man is of unique value owning to his relationship to God but is not the god declared by the hybris of an atheistic humanism — because of these things, I look on any kind of collectivism with the utmost distrust.

And, following from these convictions along the lines of reason, experience, and the testimony of history, I arrive at the conclusion that only a free economy is in accordance with man’s freedom and with the political and social structure and the rule of law that safeguard it. Aside from such an economic system (for which I make no claims of automatically perfect functioning), I see no chance of the continued existence of man as he is envisaged in the religious and philosophical traditions of the West. For this reason, I would stand for a free economic order even if it implied material sacrifice and if socialism gave the certain prospect of material increase. It is our undeserved luck that the exact opposite is true.

How do we restore confidence in free markets? Formulate a robust explanation of their moral value. Read Economic Liberalism and its Discontents on Public Discourse.

In his recent book The Creation and Destruction of Value, Princeton University’s Harold James observes that the 2008 financial crisis resulted in more than the devastation of economic value. It also facilitated a collapse of values in the sense of people’s faith in particular ideas, institutions, and practices. Among these, few would question that economic Liberalism’s credibility was significantly undermined.

As time passes, more people may recognize that the financial crisis owed much to factors that had little to do with markets as such. As several scholars illustrated in the 2009 monograph Verdict on the Crash, the causes included regulations that encouraged irresponsible behavior by banks, imprudent central bank policies, not to mention outright collusion between politicians and government-sponsored enterprises such as Fannie Mae and Freddie Mac.

Unfortunately for promoters of free markets, knowledge of these facts will take time to counter the widespread perception that economic liberalism—manifested in financial liberalization, privatization, deregulation, and increased competition—contributed significantly to the 2008 crisis.

In the meantime, those committed to economic liberalism have a chance to rethink and reformulate the case for markets. Certainly the efficiency arguments for economic freedom will be revisited, refined, and rearticulated. But it’s also an opportunity for economic liberals to reexamine what is often a weakness in their position—the principled case for markets.

Blog author: sgrabill
posted by on Thursday, November 5, 2009

This week’s Acton Commentary:

Does the market inspire people to greater practical virtue, or does it eviscerate what little virtue any of us have?

Far from draining moral goodness out of us—as many think—the free market serves as a “school of the practical virtues.” Rather than elevating greed and self-sufficiency, the market fosters interdependence and cooperation. Its rewards do not go to those who are the most isolated, self-absorbed, or cut off from society, but to those who sustain mutually prosperous relationships with others.

Adam Smith made a striking observation more than two hundred years ago in his treatise, The Theory of Moral Sentiments. In a commercial society, he wrote, “every man becomes in some sense a merchant.” If Smith is right, what does that imply for the development of character in society? Is the market economy more likely to produce a Bernie Madoff or a Dave Ramsey? Does the market tend to erode character traits such as honesty, loyalty, courage, and the responsible stewardship of resources? (more…)

My commentary on the forthcoming social encyclical was published on National Review Online. Here’s the complete text:

On Tuesday, Pope Benedict XVI will release his first social encyclical, Caritas in Veritate. The pre-release buzz from the Catholic Left on each of his two previous encyclicals has so far proven wrong each time, so the rule should be to wait and see what the pope will actually say.

Each time, with previous encyclicals, we have been told that the pope is preparing to lambaste capitalism and call for state measures to heavily regulate it with an eye to redistributing wealth, cleaning up the environment, controlling consumption, etc. Each time, the final text has demonstrated that the pope’s conversion to progressivist causes has been greatly exaggerated. Invariably, his arguments have been highly sophisticated and have defied easy political categorization.

In advance of Caritas in Veritate, Catholic “progressives” are working themselves into a frenzy of predictions, recommendations, and anathemas — and not one of them, to my knowledge, has seen even an early draft of the encyclical which has been two years in the making.

Will the document draw attention to the weaknesses of Western-style capitalist systems? One hopes so. We might expect the pope to call on market forces to be regulated by moral concerns, within a strong juridical framework, and an exogenous apparatus of standards to curb excesses.

But here is the operative question: In what sense would such a call be a blow against the idea of free economic institutions? The short answer is that it will not be.

There are few advocates of market economics who advocate a complete lack of regulation rightly understood. Every transaction in the marketplace is in fact regulated by contract law, reputation, industry standards, competition, certification and monitoring, and profit and loss systems that reward prudence and punish excess over the long term.

Do these need strengthening? Certainly, and it should be noted that a main force for weakening them is not the market as such, but partisan interventions in the market. (more…)

Blog author: jcouretas
posted by on Wednesday, November 26, 2008

Following up on our coverage of Pope Benedict’s economic “prophecy,” here’s a snip from yesterday’s “Papal Bullishness” editorial in Investor’s Business Daily. Read then-Cardinal Ratzinger’s 1985 article “Market Economy and Ethics” here.

The Pope gave a “prediction that an undisciplined economy would collapse by its own rules,” the ex-socialist lawyer and economics professor nonsensically claimed at Milan’s Cattolica University last week.

Tremonti conveniently omitted that elsewhere in the Pontiff’s 2,300-word analysis he grumbled that Theodore Roosevelt and Nelson Rockefeller spread “the notion that only Protestantism can bring forth a free economy — whereas Catholicism includes no corresponding education to freedom and to the self-discipline necessary to it, favoring authoritarian systems instead . . .”

Furthermore, the only apparent English translation of the paper is on the Web site of Fr. Robert Sirico’s Michigan-based Acton Institute. Why would a think tank devoted to emphasizing the free market’s spiritual underpinnings tout an anti-capitalist tract?

Linked yesterday on the Drudge Report and picked up by news outlets all over the world is a brief Bloomberg report on a statement from the Italian Finance Minister Giulio Tremonti. Tremonti attributed to Pope Benedict XVI a “prophecy” dating from over twenty years ago concerning the current global financial meltdown.

Again, the story is quite brief, and here’s the gist:

“The prediction that an undisciplined economy would collapse by its own rules can be found” in an article written by Cardinal Joseph Ratzinger, who became pope in April 2005, Tremonti said yesterday at Milan’s Cattolica University.

Tremonti’s remarks were made at the inaugural academic year address at the university. It’s unclear to me what the context of Tremonti’s prophetic attribution is, and perhaps some of the colleagues in our Rome office can enlighten us as to Tremonti’s economic and religious perspective.

But if you want the original context of then-Cardinal Ratzinger’s statements, avail yourself of the only readily-accessible English translation of the article cited by Tremonti: “Market economy and ethics,” given by Ratzinger in in 1985 at a symposium in Rome, “Church and Economy in Dialogue.”

Here’s the full quote from Ratzinger’s paper:

It is becoming an increasingly obvious fact of economic history that the development of economic systems which concentrate on the common good depends on a determinate ethical system, which in turn can be born and sustained only by strong religious convictions. Conversely, it has also become obvious that the decline of such discipline can actually cause the laws of the market to collapse. An economic policy that is ordered not only to the good of the group — indeed, not only to the common good of a determinate state — but to the common good of the family of man demands a maximum of ethical discipline and thus a maximum of religious strength.

As you can see from this quote and the context of the larger paper, the import of Ratzinger’s warning is not simply about an “undisciplined economy,” but more specifically about an economy that lacks participants who act from the basis of a serious and committed moral foundation, one that is “sustained only by strong religious convictions.” It’s about a lack of religious discipline as much as economic discipline.

Reading Tremonti’s quote as it appears in the Bloomberg article (which admittedly might be quite different in its own original context) might lead one to think that Ratzinger was simply talking about the lack of material discipline, for which the “new frugality” would be an adequate cure. But as Ratzinger rightly observed then, the causes of poverty and economic distress are not simply material, but also spiritual.