One Instance Where I think the Religious Left is more Biblical

No it’s not on redistribution. Certainly, charity and voluntarily giving away wealth is a biblical concept. I’m not convinced government redistribution is.

Yes, I understand modern capitalism arose out of “Christendom.” (Arguably a lot of a-biblical and anti-biblical things did as well). But there are two things about capitalism that seem in DEEP tension with what the Bible teaches: One it’s a system based on materialistic coveting. That violates one of the Ten Commandments. And two it’s a system that requires usury in order to work, something the Bible arguably categorically forbids.

One could argue Islam has not advanced economically because they don’t permit usury. But one could also argue this is the more authentically biblical Christian position as well.

Indeed Christendom used to outlaw virtually all forms of usury. The Bible, at its most charitable, cautions against usury. At its least charitable the Bible, like the Koran, bans it. The Bible never mentions anything positive about lending money and charging interest on it (correct me if I am wrong).

Aristotle too thought there was something “unnatural” about money making money.

Yet, arguably our modern system of wealth creation wouldn’t work without it. Arguably Christianity had to “find” a way to reconcile itself with usury in order to usher in the modern world of material comfort. Arguably whenever Bible believers use their credit card, get paid interest on a cash bond or in a bank, they do a Thomas Jefferson and cut out those verses of the Bible which suggest it’s sin. (Or do Bible believers repeatedly confess this as a sin?)

Modern democratic-capitalist systems treat usury similar to earned wages. We let the market determine the numbers, but get to a point where we draw a line with a minimum wage or maximum interest rate cap.

And free market economics teaches, probably correctly, that these interferences have unintended but foreseeable negative consequences. See Todd Zywicki’s latest post on proposed state law to cap non-traditional loans at 36%. There probably are bad consequences, which may outweigh the good, that will come from such a law. Lenders simply won’t loan folks who they’d like to charge above the cap rates. Many of those borrowers will go to loan sharks instead.

(Likewise with the minimum wage, I wish every McDonald’s worker could be paid a “living wage”; but what would actually result is they wouldn’t have jobs and more skilled workers would be hired to do the work; I had a student who was a manager at McDs; he didn’t know about any of this economic theory; but he testified that one manager could do the work of 3-4 minimum wage McD workers.)

On the other hand, it could be irresponsible folks are already in too much debt and not getting ANY loan is better than getting a high interest loan.

Again, as a free market guy who is not much of a religious believer, I don’t want to see stricter usury laws. I see usury (that is, ANY interest) in principle like cocaine. Payday loans are like crack. I think these should be legalized as well; but I don’t suggest getting involved with it.

But I’d like to see socially conservative Christians, who think liberty must yield to public issues of morality, make reforming usury laws with much stricter caps something central to their political agenda.

There is nothing wrong with lending money in and of itself. If there were no inflation, then there would be no need for interest. Getting paid interest that equals inflation is, in my view, not usury, but like lending money and getting back what you lent out. But we need additional interest in order to make the system work.

In other words, we need to take a neutral mechanism (lending money) and sprinkle it with a little cocaine (something bad but that should be legal) to make the system work.

That’s how I view our modern banking system on which capitalism depends.

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15 Responses to One Instance Where I think the Religious Left is more Biblical

  1. I’m curious to know how, in your view, the Bible defines “usury.” (I’m not well-versed in what the Bible says, so I haven’t much idea). Is usury “making money on money” or is it “making too much money on money” (or charging “exorbitant” interest)? I assume, from what you write, that you believe it’s the former, but I had assumed it to be the latter.

    Also, is the person who takes out a loan–uses a credit card–necessarily guilty of usury? As far as regular/passbook savings accounts go, I doubt if they usually exceed the rate of inflation (timed savings accounts, like CD’s, however, probably do, or are at least more likely to).

  2. Jon Rowe says:

    I’ll check the proof texts. It could be that they can, like many provisions, go in more than one direction. However, they can be interpreted as ANY interest. Indeed, fundamentalists are the one’s who tend to take the terms most literally and should be the ones most amenable to this understanding.

  3. Jon Rowe says:

    The person who takes out a loan arguably is the victim of usury. However, investing in a bank, a bond, etc. that would make you a perpetrator.

  4. tom van dyke says:

    http://www.fordham.edu/halsall/source/aquinas-usury.html

    I think you’ll find what we now call “opportunity cost” implicit in there.

  5. Justin says:

    It also seems to me that capitalism renders the whole idea of usury meaningless, even if you decide that usury means “excessive interest.” Since, in a completely free market, interest rates are set by the market, there is no such thing as “excessive interest,” only what the market will bear.

  6. Jon Rowe says:

    Tom,

    Many thanks for the link; that’s where I suspected Aquinas came down.

  7. AMW says:

    I’ll grant that the Bible looks askance at interest. But I strongly object to the idea that capitalism is based on materialistic coveteousness. The 10th commandment says you shouldn’t want other people’s things; it doesn’t say you shouldn’t try to acquire a similar portfolio of things.

  8. James K says:

    There is nothing wrong with lending money in and of itself. If there were no inflation, then there would be no need for interest.

    But inflation is only part of interest. Money represents a claim on goods or services, in its own way it’s just another useful tool, like a car. A friend might lend you their car for free, but a stranger will demand rent because going without a car for a time is to suffer a harm, one that justly demands compensation. That’s ultimately what interest is: rent you pay for borrowing money.

    Or put another way: what tom van dyke’s said about opportunity cost. Although it’s also important to address risk, but I think you can do that by talking about losses suffered in expected terms rather than just realised losses.

  9. Jon Rowe says:

    James,

    That makes sense. One issue that concerns me with the rent analogy is, the higher the rent, the nicer the car/apartment? With usury, it seems the higher the rent the shittier the apartment.

  10. Jon Rowe says:

    AMW: I am going to have to look at the literature on what “coveting”really means. There are different ways to interpret these concepts. In a strict sense, I think you could be right. It’s your neighbor’s particulars. But I see “keeping up with the Joneses” as part of the traditional meaning of “coveting.” “He’s gotta have that, and so do I.”

  11. AMW says:

    That makes sense. One issue that concerns me with the rent analogy is, the higher the rent, the nicer the car/apartment? With usury, it seems the higher the rent the shittier the apartment.

    No, with usury it’s the higher the rent the shittier the tenant.

  12. Jon Rowe says:

    Yeah. Unfortunately you are right. I do see these as predatory lenders preying on people who are shitty with their financial responsibilities, not exactly doing them any favors. But if it’s a voluntary transaction I’m just going to leave them alone. Again, I see it like transaction to buy coke.

  13. AMW says:

    But I see “keeping up with the Joneses” as part of the traditional meaning of “coveting.” “He’s gotta have that, and so do I.”

    Yes, you can probably find biblical support for that. Envy may drive me to work hard and acquire what my neighbor has. But in that case, it’s the envy that is sinful, not the hard work.

    But I think it’s telling that Exodus 20:17 doesn’t say “don’t desire posessions.” That is a very common religious tenant, and would be a much more straightforward way of getting at the point you make above. Instead, it says “don’t desire your neighbor’s posessions.”

    Moreover, the Bible very often ties righteousness and material goods together. The OT prophets link future prosperous times for Israel with their turning back to God and fulfilling their covenantal obligations. The authors of the book of Proverbs often say that prosperity is a reward to the wise, who are closely linked with the righteous. Conversely, they often use the threat of poverty and hunger as a warning against slovenly, unrighteous living. And the book of Ecclesiastes, though insistent that all things “under the sun”, including wealth, are unfulfilling, flatly states that it’s a blessing when God allows someone to have posessions and enjoy them.

  14. James K says:

    Jon, AMW’s right with lendign the “apartment” is the same no matter the borrower because money is fungible, $500 borrowed from a bank is exactly the same product as $500 borrowed from a pay day lender.

    And I know there have been some studies on no-profit pay day lenders and they often have incredibly high interest rates too, just to break even. The people taking those loans generally can’t get credit cards so they’re really bad risks.

  15. buddyglass says:

    Without having read the previous comments, though thoughts on your two points:

    1. The engine that drives capitalism is indeed greed, but it need not be so for the individual Christian. I think it was John Wesley who said, “Earn all you can, save all you can, give all you can.” The man could potentially have been wealthy given his income at the end of his life, but he gave away 90% of what he earned. Clearly he was not covetous.

    Second, while capitalism does tend to revolve around greed, that doesn’t damn it as “unbiblical” as a system. Consider what its alternative (authoritarian communism) revolves around: the threat of violence. Capitalism essentially frees individual actors up to be greedy if they so choose. Many do. But it is not a requirement. Damning capitalism because it permits greed is like damning Lawrence v. Texas because it permits sodomy.

    2. I don’t consider that capitalism requires usury, depending on how you define usury. For instance, if you define it as “conspicuously enriching one’s self by charging more interest than is justifiable given the calculated risk of a given loan”. A high-interest loan may not be usury if its high level of interest is warranted given the objectively calculated risk of making the loan in the first place.

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