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Samuel Gregg on banking and the common good

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Can we live the good life in the world of finance and banking? Acton’s research director, Samuel Gregg, explores that question in his latest book For God and Profit: How Banking and Finance Can Serve the Common Good. He was recently interviewed by the Social Trends Institute in order to discuss the motivation behind writing the book as well as expanding on the theme of his book.

Some of the highlights:

What’s the biggest challenge facing Christians and other people of good will seeking to shape the world of finance and banking?

Perhaps the most important is that we need to learn how modern banking and finance functions before they make suggestions or critiques. There’s no point criticizing something like short-selling unless you understand, first, what short-selling is, and second, the ways in which it actually serves as an early warning system for significant problems in a business or even an economy. In fact, short-sellers are invariably light-years ahead of the regulators when it comes to such matters.

Another example is speculation. The word has very negative connotations but speculation plays a crucial role in stabilizing prices over the long-term and smoothing the supply and demand of commodities (such as food, oil, and minerals) and currencies. This in turn enables individuals and business engage in better planning for their economic future. Are there forms of speculation that amount to sophisticated gambling? Yes, but those cases are actually very rare.

A second major challenge is to see finance as not something that’s merely useful from time to time but as something through which the economic component of the common good can be further realized. Because finance helps to put the goods of the world to use for billions of people over extended periods of time. When I invest in the stock market, for instance, my investment is put to work in other people’s businesses and enterprises, thus helping others—who, in all likelihood, I’ll never know—realize their dreams and ambitions now and in the future. In that sense, finance provides a bridge between me and others, and my present and future, and other peoples’ present and future. It builds trust, prices risks, and enables opportunity. Without these factors at work, we would all be living in the subsistence economies that characterized the pre-medieval world.

 

Can virtue be found in the financial sector?

Absolutely. Money can certainly become an idol and greed is never good. But we can be virtuous in the use of money and capital in ways that go beyond philanthropy and charity.

Reading Aquinas on this matter is eye-opening. He defines magnificence as the virtue of “that which is great in the use of money.” It is not so much, he specifies, about making gifts or charity. Nor, Aquinas adds, does the person who embraces this virtue “intend principally to be lavish towards himself.” Rather, he says, magnificence concerns “some great work which has to be produced” with a view to the good that goes beyond the immediate gain, and which cannot be done “without expenditure or outlay” of great sums of money. Moreover, magnificence for Aquinas also concerns “expenditure in reference to hope, by attaining to the difficulty, not simply, as magnanimity does, but in a determinate matter, namely expenditure.”

Here we find a hitherto underappreciated basis for a Christian understanding of finance as a vocation. Magnificentia isn’t so much about who owns the wealth. Aquinas points out that the poor man can also choose to do great things. Rather it’s about the one who deploys great sums to help realize a “great work.” It’s also important to know that Aquinas links the act of magnificence to one of the three great theological virtues: the act of hope. This is especially relevant to finance, for without hope—the expectation of, and firm confidence in, positive outcomes, even in conditions of uncertainty—the entire world of finance would crumble from within.

Read the full interview at STI.

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Sarah Stanley

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