Banking on the Margins or the Core of Human Flourishing?


Samuel Gregg’s new book makes it clear that the fundamental purpose of finance, as of all civic practices and institutions, is the good of human beings.

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Heard any good banker jokes lately? Since the 2008 financial crisis, finance professionals seem to have displaced lawyers as the most loathed. (Though that doesn’t mean that lawyers have become any less loathed.) “Banker” and “stock trader” have both become synonyms for “greedy son of a gun who lines his pockets by stealing bread from the mouths of the poor.” The Occupy Wall Street movement built weeks of media coverage on this theme. And a certain senator from Vermont almost leveraged it into a successful run for the nomination of the Democratic Party for the presidency.

The message resonates with many Americans because it contains a kernel of truth. In recent years, many who work in banking and finance have clothed themselves in considerably less than glory. And though wealth is not a fixed pie, as many Bernie Sanders supporters seem to suppose, the injustices perpetrated by some in the financial sector have caused real harm to deserving poor and middle-class Americans.

Yet the equation Finance = Avarice can conceal more than it reveals, as Samuel Gregg demonstrates in his book, For God and Profit: How Banking and Finance Can Serve the Common Good. Greed and finance are not the same thing. Gregg lays out a careful and detailed argument for the proposition that, done well, financial endeavors can serve the common good. In fact, finance can be a vocation—a calling by God to serve others, including the least well-off, through the wise employment of money.

Misconceptions and Moral Qualms

A major barrier to seeing this possibility is widespread ignorance of how finance works. Clearing away misconceptions is a delicate task, especially in a book for a general audience. One wants not to assume too much knowledge but also not to insult readers’ intelligence or good will. Gregg strikes the right balance as he walks through the fundamentals of economics and finance.

He examines the historical foundations of zero-sum economic thinking (which was founded in ancient experiences with zero-sum and exploitative economies), and how the rise of capital during the commercial revolution of the Middle Ages enabled widespread participation in economic growth. He explains financial practices such as short trading, the role that a government’s monetary policy has on inflation and unemployment, and much else. Throughout, he probes financial practices for their underlying logic and purposes. Readers will benefit from his insights, no matter how much economic knowledge they possess at the outset.

Another obstacle, especially for religious people, is the problem of usury. All three major monotheistic faiths prohibit usury. And at various times religious leaders have taught that usury consists of charging interest of any kind. Gregg walks carefully through philosophical, Jewish, and Christian teachings on usury to show that the subject is more complicated than that.

Ancient thinkers such as Aristotle, Cicero, and Seneca objected to moneylending because it discourages liberality and because it was dishonorable. Seneca condemned the practice because it amounts to a sale of time, life is measured in time, and charging interest therefore is tantamount to murder. But the most common argument was that, unlike labor and creative effort, money is barren, and breeding interest from it is therefore unnatural.

Both Hebrew Scriptures and the New Testament contain admonitions against certain loans, such as interest-bearing loans to the poor and, for Hebrews, to fellow Jews. One of the most categorical of these admonitions is recorded in the Gospel of Luke, where Christ says,

And if you lend to those from whom you expect repayment, what credit is that to you? Even sinners lend to sinners, expecting to be repaid in full. But love your enemies, do good to them, and lend to them without expecting to get anything back.

These are strong words that seem not to admit of contingencies or exceptions. Yet Gregg argues persuasively that the prohibition against usury should not be understood as an absolute prohibition of moneylending or even of profiting from moneylending. Philosophical and religious objections to usury direct us to focus on the intention with which money is lent. Gregg argues that usury is fundamentally about exploitation. The injunctions in both Hebrew and Christian scriptures emphasize “the need to be generous toward, rather than exploitative of, the poor.”

As for the objections of ancient philosophers, the problems they identified largely dissolved after the commercial revolution. However, explaining the dissolution still required some hard thinking. Aristotle’s claim that profiting from moneylending was a perversion of money’s nature was eventually met with the argument that interest is a way to restore to a lender what he has lost in opportunity costs. Because in a commercial economy money can serve as capital, which does breed profit when employed for productive ends, a financier who lends rather than invests has forgone a potential profit on the investment-use of his money and is entitled to be compensated for the difference.

Problems with Capital Finance

Of course, systems of capital finance raise other problems. One particularly acute issue in our age concerns the separation of the ownership of businesses from their management and operation. Executives who run publicly traded companies take risks with other people’s money. Conversely, the shareholders often have no inherent interest in the business’s plan of action or the moral value of the particular goods and services that the business provides. Their interest is purely instrumental. Many of them are happy as long as the business turns a profit. In these corporate structures, unlike in family businesses and closely held corporations, there is no intrinsic connection between stakeholders and any common good of the enterprise, much less the common goods of the communities in which the business operates.

Gregg insists that these problems are not new. They have persisted “as long as there have been stock markets,” in fact since “the late-medieval and early-modern world through devices such as triple contracts.” And he observes that financial markets today spread wealth more equally than ever, giving millions of investors a stake in the world of finance. “This in itself is surely a good thing.” Yet he concedes that the cost of equality and wealth opportunities “may be more depersonalized relationships.” This is almost certainly true, and this cost begs for further examination.

What Gregg calls the “detachment” of many financiers and capitalists from the businesses that they finance manifests itself in other pathologies, too. Finance can become narcissistic, developing a “preoccupation with the technicalities of creating and manipulating new financial vehicles.” In the build-up to the 2008 crisis, financiers “became increasingly fixated with developing ever-more-complicated risk instruments in which the complication itself became seen as enhancing the value of the product.”

These difficulties are compounded by the cozy relationships between financial elites and government, known as “crony capitalism.” Regulations, central banks, tax laws, and other government actions within the commercial realm all generate opportunities for the rich to rig the game in their own favor. Gregg concedes that the “low regard in which many today hold the financial industry surely owes something to the perception that the financial industry, despite its contributions to wider economic meltdowns, benefits from assistance that is not accorded to other segments of the economy.”

The Goodness of Money

Against that perception, Gregg offers a more attractive ideal, a vision of “Freedom, Flourishing, and Justice” through finance. He accepts the Christian conception of flourishing as freedom through the grace of Jesus Christ from sin and vice. This freedom is, among other things, a freedom to do good in the world. In the Christian view, true self-determination does not consist merely of following one’s passions and deepest desires. Rather, it consists in exercising our reason and free will to avoid evil and to integrate good ends into our lives through our choices and actions.

This involves the right ordering of goods in our lives. Money is merely an instrumental good, and we go wrong when we pursue it for its own sake. Yet its instrumental value is realized in service to what Roman Catholic social teaching (Gregg calls it “Christian” teaching) calls the “universal destination of material goods.” Finance enables the common use of material resources both by enabling charitable giving and by enabling investment that creates new wealth for distribution through the channels of commerce.

The universal destination of material goods may strike non-Catholics as an artificial, unrealistic, or even oxymoronic notion. Furthermore, it seems anachronistic in the age of intellectual property and microfinance, in which human flourishing requires the liberation of creativity and productive labor more than access to material commons. Nevertheless, Gregg’s main point comes through clearly: Finance can play an integral role in meeting the requirements of distributive and commutative justice.

This role is described in the last chapter of the book, which concerns the “goodness of money.” Gregg acknowledges that that term will strike dissonantly many ears that are attuned to Christian and natural law teachings. Money is neither intrinsically good nor inherently evil, Gregg observes; it is an instrument. Yet, when it works well, it functions as no other instrument does, building relational interdependence and trust among those who participate in commerce, generating wealth and enabling charitable giving, and creating opportunities for the poor to lift themselves out of poverty.

Money does not perform this work on its own. It requires financiers to engineer its productive use in the form of capital. Those who are called to this noble task must be moderate toward money, neither loving it for its own sake nor forsaking its instrumental function. They must embrace the virtues and recognize the purpose of money, which is to serve the well-being of their clients and their communities. The fundamental purpose of finance, as of all civic practices and institutions, is the good of human beings.

Therefore, a just pursuit of the vocation of finance requires a mind rightly ordered to the point of finance: human flourishing. Anyone who senses this call can get quite a lot straight by reading Samuel Gregg’s fine book.

Adam MacLeod is an associate professor at Faulkner University’s Thomas Goode Jones School of Law and author of Property and Practical Reason (Cambridge University Press).

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