I have been driven to forgery by my children. Admittedly it’s a machine that makes coins out of chocolate, but it serves to illustrate what money used to be all about: intrinsic value. If the token involved ever ceased to work as a medium of exchange, you could melt it down to access its value. Or eat it, or wear it, or drink it, or ride off on it, depending on what counted as money in your local economy. These days money means much more than that.
Money can be defined as those physical coins, notes or tokens (like cheques or credit cards) that are used to transact payments or purchases. Because we now have the technology to make this process electronic, ‘money’ also means the information flows that reckon balances all around the world. And because of the relative wealth of the world’s rich, money is also about power and politics. Indeed, because so many people seem to worship it these days, it now seems to function rather like a religion.
But where is the Christian God in all of this? The Church’s answer over the years has been to focus on usury, just price and debt.
Usury, was the traditional horror of lending money at interest, based on the Aristotelian view that it is ‘unnatural’ for sterile money to breed money. The three Abrahamic religions all contain a formal prohibition on lending at interest. Famously, Jewish interpretation qualified their ban to limit it to fellow Jews, releasing Jews to become the money-lenders of Europe. The Christian Scholastics qualified the ban to allow the calculation of the opportunity cost of forgoing use of the money lent, and the risk of it not being repaid, to give an amount of ‘compensation’ that was effectively ‘reasonable interest’. So usury was re-positioned to mean ‘unreasonable’ levels of interest, rather than interest itself, as was reflected in the existence in law of interest ceilings. One has just been reintroduced in the UK, to cap payday lending rates at 0.8% per day, following pressure from Bishops community through the House of Lords.
Closely linked to this debate traditionally was the idea of Just Price: how much profit it is legitimate to make on top of the cost of producing a good or service. This debate fell into abeyance in the modern period with the wholesale takeover of the idea that the market price is essentially neutral and naturally ‘just’. But more recently, concern about just pricing has inspired the Church’s valuable support for fair trade, and debate on the environment. Costs to the planet (‘externalities’) are rarely factored into commercial pricing, but the lessons from the Fairtrade industry is that people of good will are happy to pay extra if they think in doing so they can use their spend to further social outcomes, as well as to procure the product in question.
In recent times, the Church’s approach to money has been reflected in its involvement with Jubilee 2000. This campaign was about using the Biblical concept of ‘jubilee’ to mark the Millennium by forgiving the debts of the world’s most indebted nations, and did succeed in shaming a wide variety of institutions into writing off debts that in most cases would have long since been repaid were it not for the large amounts of interest charged. This has morphed into current engagement with consumer debt, with Archbishop of Canterbury Justin Welby pioneering support for credit unions and debt counselling.
But for me, the dog that isn’t barking is the Church’s engagement with the debate on scarcity. Technical economists like to point out that scarcity is formally about ‘opportunity cost’, that is, there is not enough of everything to go round, so in order to get what we want we must forgo something in order to get it. Generally this means we pay, which means that our money is no longer available for something else, so life is about trade-offs and compromises.
Of course, what we usually mean by ‘scarcity’ is that something is rare, or finite. Like the planet’s resources. And this makes economics a zero-sum game. If one nation has all the oil or diamonds, then other nations have to be nice to them in order to get some. Or fight them for it. This zero-sum mentality – mine versus yours – fits in well with a narrative about money that is about a finite physical supply of coinage. If I hoard my gold coins, they are not available to you, or to anyone else. And while this is a deficient narrative, the idea of finitude encourages – after all of the wars have been fought – collaboration between parties in order to share resources that would otherwise be unevenly shared.
But all efforts in this regard have been delivered a body blow by current monetary policy. This is because money is no longer scarce, in that it never seems to run out, for those in power. While governments still try to curb consumer exposure to this music-never-stops approach to credit, the banks still benefit from it, through policies like ‘Quantitative Easing’, which is the practice of inventing money in order to keep an economy in motion. And the banks do this on a smaller scale every time they approve a loan. They don’t actually have this money in their vaults. They create it largely out of thin air. So while money remains scarce for ordinary people with poor credit histories, it is defiantly plentiful for financial institutions and the wider economy. It could also be plentiful for Greece, if the international community willed it that way.
And this matters because pricing is one way of limiting supply and demand. If we want to protect our planet, those resources that are genuinely finite need to be rationed. When money itself becomes untethered from the logic of the market, it drives an attitude which borders on the irresponsible. The giddying effect of an unlimited money supply militates against a responsible debate about how best to steward a finite planet.
So how should we respond? Tragedies of the commons, like over-fishing, depend on naive adherence to the idea that if we all just keep pursuing our self-interest, the invisible hand will orchestrate a benevolent outcome. The Churches have always been suspicious of this narrative, not least because the famous ‘bias to the poor’ sounds a klaxon about abuse of power whenever laissez faire is preferred. So efforts to use the money the Church has powerfully, but in solidarity with the powerless, lie at the heart of ethical investment initiatives, and other efforts to channel the Christian pound into kingdom-building activity.
But the role-modelling by ecclesiastical institutions in divesting or investing is just the start. Do your transactions create the kind of economy that makes you feel proud, or are you propping up a regime that relies on your support to legitimise it? The Fairtrade movement showed us how determined consumer effort can create new markets and transform lives. What’s next?
Eve Poole is an Associate Research Fellow of William Temple Foundation.
More from our bloggers:
Charging Interest Ins’t Immoral, It’s a Matter of Timing
by Ian Steedman