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Faith and financeDr. Philip Sampson looks at the current financial disaster, part 2Last month I suggested that the world of finance is shot through with faith. The very banknotes in our pocket or purse rely upon our faith in the Chief Cashier to ‘pay the bearer on demand…’ So what we mean by ‘faith’ matters when we go to the bank, just as it does in our personal life. Moreover, if we embrace a perverse understanding of faith, we risk shipwreck, whether as individuals or in our public life together. Traditional banking emerged in a culture thickened by the biblical understanding that authentic faith and authenticating evidence are bedfellows. A 120% mortgage would have appeared reckless and irresponsible. But, in recent decades, the public understanding of faith has changed. A mystical ‘Dawkinsian’ view, which opposes faith to evidence, has gained ground and this understanding has come to dominate in public life. This perverse understanding of belief as irrational seals faith and evidence into separate boxes and has serious consequences for public life. Ironically, a doctrine which claimed to enlighten us actually makes us more vulnerable to delusion rather than less. Once our faith that all will be well is divorced from the evidence before our eyes, the 120% mortgage can become a selling point. Both bank and borrower lost the habit of relating faith to facts. If we refused to face facts like this in our friendships, we would rightly be called gullible. Banking became gullible and infatuated. But the irrational infatuations bred by ‘Dawkinsian’ faith cannot survive long in the real world. And we all know what happens when an immature infatuation ends: disenchantment and recrimination. The former Federal Reserve Chair, Alan Greenspan, recently confessed that he had ‘misplaced’ his trust, and the banking crisis had left him ‘in a state of shocked disbelief’.1 But how did this repression of authentic faith happen? Why did so many otherwise intelligent people fall for the Dawkins delusion that faith is a leap in the dark? To understand this we must look at what has happened to the local high street bank. Modern mechanismsThe once proud granite and pilastered building is probably still there, but has likely been turned into a wine bar or bistro. The trustworthy traditional bank manager has gone, replaced by the young executive recruited from an unrelated industry. Few banks any longer know their customers personally. Moreover, these outward changes have been mirrored by a change in the nature of banking itself. A new word has entered our vocabulary: derivatives. But what does it mean? We are accustomed to thinking of our savings deposited with a bank as our assets. But, from the bank’s point of view, our savings are a liability (because we can demand repayment). Conversely, if we have a bank loan, it is a liability for us, but an asset for the bank. And so our debts become the bank’s assets, which can be traded like any other asset. This had long been a part of banking practice, but by the 1980s bankers had realised the potential in this innocent procedure. For example, mortgages (considered as assets) can be pooled, and different kinds of bonds can be created, derived from the original loans. These derived financial instruments can be traded like any other asset. Cash in cyberspaceDerivatives markets blossomed with deregulation, computerisation and credit card debt. Their tradable value soon greatly exceeded that of the underlying assets. Staggering amounts of capital began to move around the virtual world, and cyberspace became the place where most of your money is, most of the time. Derivatives markets rapidly became so complex that no one knew any longer where any particular loan would end up. The local knowledge of the branch manager was replaced by a credit score; sales teams had targets to meet; and prudent lending gave way to statistical risk prediction. Community contact and trust came to seem old fashioned, and faith in the manager’s prudent judgment was the redundant relic of a past age. Banking now rested on the secure foundations of scientific management and risk prediction. Science had made mere faith in the bank redundant. But had faith really gone away? According to Joshua 24.15, it is impossible to be without faith; we must always choose for ourselves the one we will worship and serve. So where did banking place its confidence? Modern banking sought security in science, and relied on the idea that markets are fully self-correcting mechanisms. Yet, even as we believed in these idols, we denied that it was a matter of faith. We deceived ourselves into thinking that science would enable obviously impossible loans to fly indefinitely. The public acceptance of the Dawkins doctrine allowed us to pull off this doublethink, for it stipulates that science excludes faith. Faith in realityWe tend to think that perverse doctrines of faith are of little importance outside church. But if, as Hebrews 11 teaches, faith is fundamental to human experience and shapes human history, then society embraces a distorted version of faith at its peril. In 2008, the markets were overtaken by reality. Following the Dawkins doctrine, they had become irrational, flying in the face of the evidence. But the idea of faith as a fact-free zone is a myth and fatally flawed; in the real world faith and evidence are bedfellows. The result? Crash! Banking, torn free of its roots in evidence and authentic faith, is now free floating. As Polly Toynbee has observed, in irrational times, ‘confidence is the only currency’. But this confidence is Dawkinsian, blown about by every wind of rumour, zigzagging between ‘exuberance and despair’.2 After the crashAt the time of writing, the media has focused on greed in its search for someone to blame. As we saw last month, greed is certainly a biblical dimension of finance. But suppose that the present crisis is not essentially a moral problem but a religious one? Suppose that, by publicly embracing a perverse doctrine of faith, we make it hard to trust banks? Without authenticity, faith appears in its negative form: customers distrust banks, banks distrust one another, the market lacks confidence, everyone has doubts about the future. How might we get out of this? A religious solutionIf the central issue is religious, so must the solution be. Both bankers and their customers have to abandon the Dawkinsian insistence that faith is always fact-free, and find a more authentic understanding, one that is able to reconnect belief to evidence. Pre-modern Christian theologians were deeply suspicious of lending at interest, and were concerned with the nature of the activities which investment financed. As we saw last month, Calvin insisted that the charging of interest must serve the common good, and forbade it where it oppressed the poor. The faith-based Jubilee Centre has warned of the consequences of unfunded debt for many years, and has recently explored the role that the biblical ‘jubilee’ might play in economic recovery.3 The Communities Secretary, Hazel Blears, recognises that faith organisations, with their many community contacts, are in a good position to offer help to people in economic distress, and has suggested that local authorities should commission them to do so. This presents a host of opportunities for churches willing to grasp them. The Evangelical Alliance has an excellent website with practical suggestions.4 At a time when banking is widely associated with exploitation and greed, we should remind ourselves that there are examples of banks incorporating ethical principles. Islamic banking, which probably derived its aversion to morality-free profit from the Bible, has emphasised ethical practice and shared ownership. The Co-operative Bank, with its Christian origins, has also developed policies based on ethical principles, and attributes its recent good economic performance partly to its ethical policy of ‘trust’.5 The microfinance Grameen Bank in Bangladesh provides loans to the landless poor to start businesses. As its founder Muhammad Yanus notes, it is ‘built upon a precious resource that our ruined Western banks have long ago abandoned — trust’. By contrast, the global banking industry writes off a trillion dollars in a sub-prime crisis, ‘but they still shy away from lending $100 to a poor woman, despite the fact that such loans have a near 100% repayment record’.6 Archbishop Rowan Williams has recently observed that the greatest challenge now is ‘to recover some sense of the connection between money and material reality’ and the ‘achievement of recognisable human goals that have something to do with a shared sense of what is good for the human community…’.7 Underlying both is the need to recover an authentic understanding of faith. A loss of theological literacy in the public sphere has public consequences. Perhaps the first step to reform should be to appoint a biblical theologian to every board of banking executives. A longer version of this article appeared in Third Way in February 2009. 1 The Guardian, 24.10.08, p.1 Philip Sampson© Evangelicals Now - May 2009 |