Talk given to the parish of St Luke and Christ Church, Chelsea, 8 November 2011.
What is money?
I wonder whether you have given much thought to what money really is? Before we invented it, we bartered goods and produce, and possibly services. But it soon became apparent that some kind of secondary system would make this primary market more efficient – what if I want rice today but only have the corn to swap for it tomorrow?
So different cultures used different ‘stores of value’ – cocoa beans, glass beads, camels, metal discs – anything that that community felt had the right sort of intrinsic value to represent the price of the materials being traded. Over time, coins became the most common tools used in market transactions, and originally were worth, in the amount of precious metal they contained, exactly the same amount as the amount stamped on them. But once this system was established, it became clear that people didn’t feel the need to melt their coins down to extract their absolute value all the time, and were happy to use them as tokens. Modern coins now have very little intrinsic material value, and coins soon gave way to notes, as a more convenient way of transporting buying power. These promissory notes were often banknotes (I promise to pay the bearer on demand…), but could also be any kind of IOU – a cheque, a certificate, a plastic disc, or any token that both parties agreed held validity as a deposit or guarantee of ultimate payment.
In parallel, the banking system changed. Instead of banks literally holding the entire value of the deposits made to them, they realised that they could lend quite a lot of this out, given that people didn’t seem to want access to their deposits every day. So fractional reserve banking was born, and banks ever since have played the odds on lending out as much as they can while retaining just enough hard cash in their vaults to pay back anyone who wants to reclaim their deposits. Nowadays, the idea that you can lend out – or borrow against – assets that are not actually yours has reached monumentally sophisticated proportions in the secondary markets, with everyone hoping that when the music stops they won’t be the one left without a chair.
Credit – the idea that you can delay payment – will have been used even when we bartered: I promise to give you corn tomorrow if you give me rice today ‘on tick’. Nowadays credit is treated as a currency in its own right with the advent of the ubiquitous credit card. So what is money, now? Well, modern ‘money’ is information about relative value, and about supply and demand. That I can buy a Mulberry handbag for £4,000 doesn’t mean the bag ‘costs’ £4,000, but that there are enough people with serious amounts of disposable income out there who would like to pay this amount to own something that other people cannot afford to buy. Similarly, footballer or Chief Executive salaries are no longer about what a person is ‘worth’ but about what the market is prepared to pay for exclusivity. And it is this market in information about relative values that drives the ‘casino capitalism’ that you hear so much about – ‘positions’ being taken on where supply and demand will move across a huge range of asset classes, as well as positions on those positions, and positions on the positions of those positions, and so on. This hedging or insuring of ‘real’ assets through secondary and tertiary mechanisms is called securitization and, while it is designed to protect the original asset, nowadays separate markets have developed to trade these positions in their own right. And the sophistication of computing means that multiple transactions can be executed in fractions of seconds to take advantage of infinitesimal changes in prices. For example, the average time for which a share is now held is something like 6 seconds.
What this means in the marketplace is that increasing amounts of trust have become a condition of operating at each stage of this evolution. In the original markets, I could physically examine your carrots, in the same way you could check that I hadn’t hidden weights in my sack of corn. But coins rely on a stable administration, and IOUs require us to trust a debtor to come good. Now we need to trust our banks that they will actually be able to give us our money back when we need it, and it is when this trust breaks down that you see queues outside Northern Rock, or calls for the banks to ‘recapitalise’ in order to reassure us that they actually own at least a percentage of what they owe. And the ‘credit crunch’ of 2008 was because the banks stopped trusting each other about the statements they were making about their exposure to bad debt. So if money, and market transactions, are now essentially about trust, the tents in Wall Street and outside St Paul’s should be making the bankers and politicians an awful lot more worried than they seem to be.
What does the Bible say about money and the markets?
We’re going to work through these passages together, so what we come up with tonight will be far richer than anything I can contribute on my own, but here are some key passages about money and markets from the New Testament, and some notes about the questions they raise.
Parable of the Talents (Matthew 25:14-30)
Possibly the most referenced passage by business people is the Parable of the Talents, probably because it seems to recommend trading and even investment for profit, which is unusual given the standard line on usury. One of the things this passage makes me think about is actually about the play on words: what talents has God given you, and how are you investing in their development? But reading the passage more literally, there seems to be positive endorsement about taking risk and rewarding enterprise, and negative treatment of too narrow an interpretation of what ‘entrusting means’ – the servant who buried his talent is punished, even though he was only doing exactly what he was asked to do in safeguarding it. And in this we perhaps see echoes of Jesus’ frustration with those who would follow the letter and not the spirit of the law. The modern corporate addiction to shareholder value might be an example of this, as might St Paul’s Cathedral’s unfortunate enthusiasm for Health and Safety legislation.
The Rich Young Man (Matthew 19:16-26)
This passage has often been a difficult one for Christians with money, as it suggests that the true disciple would give it all away. Modern interpretations have glossed it into being about the willingness to give it up, which would indicate the sort of detachment from it that indicates a healthy soul (see I Timothy 6:10 – For the love of money is the root of all evils; it is through this craving that some have wandered away from the faith and pierced their hearts with many pangs).
God and Mammon (Matthew 6:19-24)
Again, this passage challenges those whose master is money. The hard saying that you cannot serve both God and money is for me interpreted by the line: ‘for where your treasure is, there will your heart be also.’ It is not so much that no-one should work in the City, but that, if you do, you need to be crystal clear about your primary allegiance to God, because wealth carries the signal temptation that it can make you think that you do not need God.
The Labourers in the Vineyard (Matthew 20:1-16)
This rather puzzling passage seems to approve exactly the sorts of inequity that make office secretaries hate temps, full-timers resent contractors, and unions go out on strike to get equal pay for equal work. I think it is a very hard passage, and it is a bit like the Prodigal Son in its central message. In business as in life, comparing yourself to others is not the best route to happiness. There will be all sorts of reasons why there is inequality in the world, and often you will not get what you feel you deserve. Indeed, if you get what was agreed, you can’t really complain. What is hard is that a simplistic reading of this passage in isolation would in my view encourage too much acceptance of injustice. The trick is to figure out on whose behalf are you fighting. If it is in solidarity with the weak, even though you too will benefit, your cause is just. If your motivation is self-justification, with the benefit for others being a rather secondary concern, your priorities are wrong.
The Unjust Steward (Luke 16:1-13)
Luke’s version of the ‘God and Mammon’ passage, this one seems to encourage some very sharp practice indeed, but note that while the unjust steward is congratulated by his boss, he does not get his job back. One way to read this passage is to think about using mammon and the marketplace as a tool to build your ladder towards God, thus making them God’s servant and not the other way around. The message still seems to be a confusing one, but perhaps while the master appreciates the shrewdness of his steward, the key message is still that the way you manage money and behave in the marketplace tells God all he needs to know about your true character.
Conclusions
I’m going to leave you to draw your own conclusions from the complexity of what we have considered, in the light of another passage, this time from Genesis: And Jacob was left alone; and a man wrestled with him until the breaking of the day. When the man saw that he did not prevail against Jacob, he touched the hollow of his thigh; and Jacob’s thigh was put out of joint as he wrestled with him. Then he said, “Let me go, for the day is breaking.” But Jacob said, “I will not let you go, unless you bless me.” And he said to him, “What is your name?” And he said, “Jacob.” Then he said, “Your name shall no more be called Jacob, but Israel, for you have striven with God and with men, and have prevailed.” Then Jacob asked him, “Tell me, I pray, your name.” But he said, “Why is it that you ask my name?” And there he blessed him. So Jacob called the name of the place Peni’el, saying, “For I have seen God face to face, and yet my life is preserved.” (Genesis 32:24-30)
Repairing the markets – my 7 Theses
- In a globalized world, capitalism reaches communities more quickly than diplomacy or aid does, and brings more money into the community
- Trade is more universally agreed than any other ideology so may well be the quickest way to address the green crisis
- A market run by angels would be perfect, so it is we who need changing, not the market
- At the moment, rich people’s ‘votes’ are prevailing, but the magic of a complex system is that it is susceptible to individual nudges
- In evolutionary biology and in game theory, co-operative strategies out-perform competitive ones, and convert them over time…
- Businesses stay in business if they keep their customers happy, so:
- We need to vote our cash to re-shape the global marketplace, so that the resulting ‘economy’ (which stems from the Greek word for housekeeping) is genuinely one which benefits the whole household and not just those living in the penthouse.
Those of you who heard my ‘voices from the congregation’ talk in Lent will know what I think about Christians in the marketplace. There are lots of us, and we have a huge amount of financial muscle. Given that the market is just the sum total of messages about supply and demand, we can transform it overnight through our transactions. That’s what created the market for fairtrade goods, and we can do it again, by supporting enterprises we like and removing our support from the ones we don’t. We can badger those who invest our savings or our pensions on our behalf about their ethical investment policies, and we can exercise our rights over any shares that we own directly. The human right movements started in America with one woman sitting down on a bus. The redemption of the markets starts the next time you hand over your card to pay for something – does your purchase send a good signal into the market, or a bad one?
