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Markus Vogt & Patrick Ruf {*}

God and Money

Notes on the Occasion of the Financial Crisis


From: Christ in der Gegenwart, 35/2012, P. 385 et sequ.
webmaster's own, not authorized translation


The euro crisis is more than a problem of heavily indebted budgets of individual countries such as Greece, Spain, Italy or Portugal. It is a crisis of confidence in the stability of our economic and monetary system. It is foreseeable that the European rescue facility is not sufficient to guarantee long-term stability - despite the dizzying increase of capital stock into the trillions. We live on credit. We shift costs and risks into the future, and using the policy of cheap money we allow ourselves a prosperity that has to be paid by others. Nobody knows whereto the road of steadily rising debt will lead and who will pay for this in the end.

However, the question of what ethical conclusions have to be drawn from the heavy indebtedness is not easy to answer. For the austerity measures, too, are connected with ambivalences: if we get off abruptly from the usual type of monetary policy, there is a high risk of stalling the economy, and to worsen rather the chances of repayment. Despite and partly just because of the crisis, investment is needed - as e.g. in new technologies, climate protection, education, health or social integration. We have to do both save wisely and invest wisely. Good fiscal policy in times of crisis seems like trying to square the circle. Quick solutions may not be expected here. More helpful than further proposals for solutions is, if you take a step back and ask what money actually is. Here, theological ethics may offer some surprising insights.


What is Money?

Money has a sacred origin. The Latin term pecunia probably comes from pecus, cow, and meant originally the sacrificial animal. It emerged from the religious trade: it was seen as a sacrifice, for which people expected in return welfare and health by the gods. "In this religious border traffic, fixed tariffs emerge now for certain divine return services; an abstract concept of value emerges," writes the philologist Bernhard Laum (1884-1974) in his study on the sacred origin of money. In our everyday language, the religious dimension has been preserved, but we are no longer aware of it. Terms like credit (Latin credere, believe) or creditors are illustrative examples for it.

For the economy money is now a neutral object, a mere medium of exchange and storage of value. But the function of the money goes far beyond this. It is "coined liberty", as the sociologist Georg Simmel argued already a hundred years ago. Money is an asset; it is awarded, credited but also withdrawn within the social communication. It is multifaceted, but "in every form ultimately a promise of value creation confirmed by documents," said the Ulm economist Dirk Solte. It has no immediate practical value, but a virtual benefit related to communication. Money is based on trust and is a promise to participate in society and to participate in the value creation. The financial crisis has impressively demonstrated that a large part of what we seemingly physico-tangibly designate "capital" is a highly immaterial and fragile item. The most important form of capital is trust.

The famous saying "Pecunia non olet" (money does not stink), which is ascribed to Emperor Vespasian, turns out thus to be false or at least it can not be generalized. Money may definitely stink, because it is not a neutral medium but opens up or denies participation.

The religious origin of money seems to be forgotten. People are no longer aware of the religious meanings of the terms around the topic of money. But the communication about and with money adopts today again more and more religious features: prophecies of the rating agencies are, thanks to the agencies' power, self-fulfilling prophecies; profit maximization as maxim that gives meaning to actions; the definition of social belonging via money-imparted consumption, etc. Money is the cult of our time.

Against this background, Jesus' warning is today anew relevant, "You can not serve God and mammon" (Luke 16:13). Jesus then did not want to demonize Mammon but denounce the link between money and religion. Money loses its freedom-creating function, if it becomes a fetish, and people define values by money instead the value of money by culture. In the collective belief in the supposed compulsion to maximize profits, money turns into the golden calf around which there is dancing, or alternatively becomes the bull in front of the Frankfurt Stock Exchange.


What do Ethics and Theology Say?

Money is not a value-neutral item. Due to its formative influence on almost all aspects of life, it is connected with a high degree of responsibility. In church and society there is a significant need to raise awareness of the ethical dimension of money, since this is often overlooked because of its anonymous nature.

Advocates of Christian social ethics have long since pointed to the risks of the financial sector. Think, for example, of Oswald von Nell-Breuning ("Grundzüge der Börsenmoral", 1928) and the by him influenced social encyclical "Quadragesimo anno" ("In the fortieth year", 1931), of the "Compendium of the Social Doctrine" (2006), the memorandum of the EKD "Wie ein Riss in einer hohen Mauer" [Like a crack in a high wall] (2009) or the social encyclical "Caritas in Veritate" ("Charity in Truth", 2009) by Pope Benedict XVI (here no. 36).

The analysis of the social encyclical "Quadragesimo anno", which was written in response to the then global economic crisis, with its diagnosis of a lacking balance of power in the political-economic structure is still of importance: "In the first place, it is obvious that not only is wealth concentrated in our times but an immense power and despotic economic dictatorship is consolidated in the hands of a few, who often are not owners but only the trustees and managing directors of invested funds which they administer according to their own arbitrary will and pleasure. ... With the credit they regulate the flow, so to speak, of the life-blood whereby the entire economic system lives, and have so firmly in their grasp the soul, as it were, of economic life that no one can breathe against their will." (No. 105 f).


Greed, Corruption - and Fairness

From the perspective of justice, both the ethical problems of the financial crisis and criteria for overcoming them can be analyzed by means of the following three basic dimensions:

Legal justice: In comparison to the lack of regulations and laws, the moral failure of individuals (as e.g. greed and corruption) is of a subordinate importance for the understanding of the financial crisis. The so-called legal justice [iustitia legalis] is more important. It requires a strong state that makes transparency possible and effectively supervises financial transactions. Financial products and markets for which such control can not be guaranteed, are ethically not permissible. In the coming years, it will be a primary task of economic policy to create a new, globally applicable legal framework, in order to ensure the common good.

Distributive justice: In the shadow of the financial crisis an enormous redistribution takes place. Profits were privatized, whereas risks were passed on to the public. Large, "system-relevant" banks were hedged with public money and make already record profits again, while the state is forced to compensate the losses incurred, and to economize disproportionately on the expenses in the social sector. Developing and emerging countries whose creditworthiness is poor are particularly hard hit. Distributive justice requires in the financial system that its redistributive effects are critically analyzed and limited as much as possible. This applies both nationally and internationally and must also apply to the distribution of opportunities and risks.

Transactional justice: Systematically considered, the financial crisis is above all a problem of transactional justice, because the payment systems collapsed, and the equivalence of give and take was and is no longer guaranteed. Due to the huge loss in value of shares, jobs are destroyed and large parts of the economy paralyzed. Many countries have lost their fair share in global exchange markets and cooperative connections. In the resulting plights, real property, businesses, banks, agricultural land and commodities are sold far below market value. Transactional justice, i.e. the equality of give and take, requires a stable and transparent financial system.



The three forms of justice complement and enable each other. A strong state (legal justice), economic growth (transactional justice) and social equity (distributive justice) are three essential principles of the social market economy. Also the financial system must submit to this ethical architecture.

Responsible management of money requires the proper appreciation of its functions. Money is today in key areas a prerequisite for participation in society. That's why the from Bangladesh originating economist and "Banker of the Poor" Muhammad Yunus, who in 2006 was awarded with the Nobel Prize, demands the access to capital as a human right. The poor - so his conviction - do not need alms but access to money, with the help of which they are able to develop their economic potential. His concept of micro-finance on a co-operative basis is currently the most successful model of poverty reduction. He seems to be successful in what elsewhere is far apart: earn money and promote development, market economy and social responsibility, orientation towards the poor and innovative economic activity, market and morality, profit and conscience, liability and solidarity.


A Bet on the Future

In "Faust II" Goethe interprets the printing of money as a continuation of alchemy by other means: After the failure of the centuries-long efforts to produce chemically gold, the "magic act" now seems to be indirectly successful. Goethe interprets this as a bet with the devil, because the future is pledged in the form of value expectations. That's why the Swiss economist Hans Binswanger economically interprets Goethe's Faust. According to that, the development of paper and book money creates entirely new, but highly risky economic opportunities. They can be characterized as a bet on the future.

The great challenge is, according to this allegory, to monitor the seductive offer of cheap money in such a way that inflation is avoided and the surplus money gets value [in Wert gesetzt wird] by the initiation of "creative deeds" (innovation).


A new Financial Architecture

The financial markets are part of complex economic happenings, which as a whole produce or destroy values and prosperity. The income generated on capital markets is therefore not a private matter, not a solitary creation of value, but the skimming off profits, and therefore it is under obligation to public welfare. Even the successful speculator Warren Buffett calls for higher taxation of capital, because it is achieved not only or even primarily by individual performance but also by chance and certain possibilities of skimming off profits. The actual creation of value does not take place in the virtual world of financial markets, but in products and services. Financial markets should support just this.

If the financial crisis serves as an occasion for overcoming the imbalance of a highly unequal distribution of opportunities by monetary policy, it will prove in retrospect to be a wholesome "dis-illusion": namely as the end of the illusion that an economy which borrows money and other forms of capital from future generations can be permanently stable. Yet it would be wrong to try to overcome the financial crisis solely through draconian austerity measures. What matters is to give the investments a new direction and a controllable amount, so that the financial economy serves the real economy, instead of bringing it under the spell of speculations.

In all of this, the individual measures must be embedded in a long-term approach, coordinated and consistently implemented. The introduction of a global eco-social market economy presents itself as a suitable model for it. Without it an intergenerational fair financial and economic policy is ultimately impossible.

The huge monetary flows revolving around the Earth every day shape the face of the global world - either for human development or for destruction. The decision of each individual, how they invest their money, has great influence on the chances of sustainable development.


What Can the Individual Do?

There are encouraging examples of ethical investment in the church; a prophetic church appears here. As early as 1975, the Ecumenical Development Cooperative Society "Oikocredit" (formerly EDCS) was established by the World Council of Churches. It grants loans to poor sections of the population in developing countries. Many other ethically oriented banks have meanwhile emerged. They invest not only directly in companies and projects which are directly motivated by a social development policy or produce environmental technology, but also in those whose ecological, social and cultural results turn out to be overall positive. The spectrum of potential borrowers and dividends is thus significantly enlarged.

Many people are hardly aware of the hidden power of money. Through everyday shopping everyone takes part in the decision whereto money is flowing. "Policy with a shopping basket" and ethical investments offer great opportunities to exercise global responsibility with relatively little effort.


Paths Towards a New Prosperity

Just the financial crisis concerns elementary questions of the mission statement of wealth. Many people believe that the goal of profit maximization is inherent in human nature. Adam Smith, the inventor of the free market economy, is often interpreted in this direction. From the perspective of moral philosophy, however, he defined in his works the longing for recognition and not the striving for benefits as the core of human endeavor. This has anew to be brought to mind - also under changed conditions. "The concern of the civil rights and liberties is not the free development of capital but the free development of the personality of each individual", formulated the journalist Heribert Prantl.

The specific contribution of the churches and of each Christians to overcome the financial crisis is especially that they draw the attention to the fundamental ethical and cultural context of a successful economy. Alois Glück, President of the Central Committee of German Catholics warns, "Without a change in culture, we have no chance of a lasting positive development." Based on Christian values, the European Union may become the engine for a new financial and economic order. Crucial for it is that debt, labor, climate and development crisis are recognized in their context.

We need a New Deal in fiscal policy, in the service of intergenerational justice and development opportunities for the poor, so that the shortages of today become the innovation markets of tomorrow. Money can be a blessing, if it is invested for the right thing.


    {*} Markus Vogt, Dr. theol., Professor of Christian social ethics, Munich
    Patrick Ruf is studying theology and business education, Munich;
    The article "God and Money" appears in an extended version both in "Mission konkret" and in "Amosinternational".
Link to 'Public Con-Spiration for-with-of the Poor'