Separation of Markets from Religion

In an article published in “England on Sunday”, a paper from from within the community of the (Anglican) Church of England, Marcus Braybrooke, writes in “The Record - Bringing theology and economics together again”:

“Economics has its origins in ancient Greece and its roots in ethics. Aristotle, for example, said that the ultimate purpose of politics and economics is ‘the good of man.’ It is also forgotten that Adam Smith was a professor of Moral Theology and wrote The Theory of Moral Sentiments 16 years before his famous book The Wealth of Nations. In The Wealth of Nations itself, Adam Smith laid the groundwork for economic analysis but this was embedded in a broader discussion of social justice and the role of government. He observed that “Commerce… ought naturally to be, among nations, as among individuals, a bond of union and friendship.”

Braybrooke also states:

“the guru of the World Economic Forum, George Soros, has warned that if economic activity is governed solely by the principle of self-interest, it is in danger of undermining social values and loosening moral constraints."

He also recites the pessimistic changes wrought by countries like India and China on levels of world poverty and repeats that fallacy that poverty is getting worse, when in fact the data show that poverty is decreasing, not increasing, and that this is a result of loosening the central powers of the State and allowing markets to develop more freely.

“Certainly the widening gap between rich and poor is intolerable. I have never forgotten on my first visit to India over 40 years ago seeing young children picking over the rubbish heaps looking for a scrap of food. The gross inequalities in our contemporary world are iniquitous and getting worse. Half the people on earth live on less than two dollars a day, a billion people on less than a dollar a day. A billion people go to bed hungry every night – and a billion and a half – one-quarter of the people on earth — never get a clean glass of water. One woman dies every minute in childbirth. The situation is aggravated by the spread of HIV/AIDS. Two and a half million people were expected to die of AIDS in the year 2004. Rightly, the conference in Kenya at which our book was launched, was preceded by a visit to an orphanage for children — some of whom were themselves infected – whose parents had died of HIV/AIDS.”

A great deal has changed in 40 years (1965!) in India and China (and Taiwan, Guandong, Shanghai, Malaysia and Singapore) since Braybrooke watched the all too common sight of people picking over the rubbish dumps. Tens of millions have been brought beyond poverty with work opportunities in thriving economies (for recent data, see www.globalizatioinstitute.com). Markets are doing more for making poverty history than all the demonstrations, all the wringing of hands and all the slogan shouting; that they don’t shout about the tremendous strides in enriching poor people – which it is plain to see travelling around these countries – can only be because the facts of the changes undermine the story that it’s getting worse, not better, and it would, of course, mean fewer sales for books telling them the opposite.

Adam Smith analysed the problem of the poverty of nations by looking for data on how nations could grow wealth and what made it difficult to do so if countries curtailed economic activity. The Soros view that ‘self interest’ is the problem (which, I may say, is a view he came to have exhibiting his self interest unashamedly in a very unSmithian manner for years – though it is better than a sinner is repentant than that he continues with ‘sin’) misses the point about self-interest in commercial economics. It is the mediation of self-interest in commercial bargaining – ‘I can only get what I want, if and only if I give you what you want’ (Wealth of Nations, Book 1, chapter 2). Two self- interested ego-maniacs will fail to agree to a bargain if they remain ruthlessly committed to their own self interest and do not take account of the other party’s self interest, and what is true for one of them is true for the other. That is the meaning of Smith’s reference to the ‘bonds of union and friendship’.

Whether there is much to be gained from brining ‘Economics and Theology together again’ is debateable. The history of religion and commercial activity is not replete with great examples or encouraging precedents. The Church in Smith’s day took a reactionary view towards commerce and to those who advocated Natural Liberty (for example, David Hume and Adam Smith) and sided throughout the ages with Mercantile interests that treated neighbours as the enemy. The problem is that religious people see themselves as the paragons of morality; the fount of all ethical policies. Braybrooke advocates unspecified ethical policies and declares: “It is now vital that moral constraints are applied to globalisation.” He hopes that globalisation will bring people to a common sense of ethical purpose.

In Smithian markets the players are free to do what they wish under the necessary constraint of the rule of law and justice and not to harm others. Illegal actions, anti-social policies of pollution dumping, toxic waste, and dangerous production methods, are no part of a Smithian market. What role there is for religion in the rule of law is not obvious and given the intolerable behaviours that often result when religions meet in close proximity, I do not expect much from their contributions – before they preach to others they should put their own inter-faith relations in order.