Archbishop of Canterbury's speech on 'The Good Economy'
Wednesday 4th February 2015The Archbishop of Canterbury's speech on 'The Good Economy', delivered at Church House, Westminster on Wednesday evening, at an event organised by the All Party Parliamentary Group on Inclusive Growth.
Good evening. It is good to be with you all tonight for this very significant event. I want to begin by commending those involved in the creation of this new All-Party Group on Inclusive Growth. The wealth of experience in its cross-party membership, which has developed in a very short space of time, is to be admired and I very much hope that it will grow further.
I have been asked to speak on ‘the Good Economy’ and reconnecting wealth creation with social justice. In what I say I shall speak of God and creation and Jesus. I hope you do not find that too surprising in an Archbishop. You very likely may not agree with what I say about God and the implications for society, but if you ask a vicar-type that is what you get.
The foundations of a Good Economy are given in the nature of human beings: creativity, gratuity, solidarity and subsidiarity, but the basis of these is creativity. Subsidiarity and solidarity are the means by which the risks of creativity are managed and encouraged.
Creativity is unique to human beings, and to misuse the words of the Wedding Service, is a gift of God in creation. God is the sole source of creation, in the thinking of most major world faiths, but in the Judaeo-Christian tradition God passes the gift on to his creation in human beings. That means that making things, and for that matter making money, are good. Wealth creation is a good thing.
From the very beginning of the Biblical story of creation, human beings are meant to develop and oversee and create. That starts with tending a garden, and moves on through skills in trade and commerce with Abraham and Jacob, to efficiency in running a household, finances and business with Joseph. All the mentions have a caveat, that such things pose dangers, something I will come back to later. In the New Testament God Himself becomes human in Jesus, a historical figure in whom we see who God is, and he grows up to learn the trade of a carpenter. Jesus worked for his living and created wealth for ninety percent of his life. St Paul has a trade as a tent maker, as he says very clearly to the Corinthians, explaining that was why he did not take money from them when he was living in Corinth and heading the church there.
Creativity is a basic human function, and a good economy is one that enables creativity to happen. That is why full employment matters, investment in education is essential, skills development is core, and businesses of all kinds should be given the space to develop and create wealth (and to fail), to create employment and prosperity for the society in which they live, it is a God-given call and function.
The market is an extraordinarily efficient mechanism of distribution in a complex society and hugely liberating of human creativity. No better form of allocation of resources has been found, and the alternatives have always led to inhumanity or even tyranny. At the same time the market cannot create or sustain the shared morality needed to ensure that it works carefully and lovingly at every level.
Adam Smith famously spoke with equal conviction of the dangers of market manipulation as he did of the invisible hand. The experience of 2008 shows that the complexity of human motivation and greed can never be left to the market to deal with. There is no such thing as a level playing field if human beings are involved, and there is no such thing as a fully fair and free market. It doesn't exist.
Creativity falls principally within the business sector, and by that I include everything from the sole trader to the multi-nationals. It is to be valued and admired, not only for the artist but also for the person that builds up a small business and employs an apprentice and three other people. They are the bedrock of a good economy. There are levels of accountability and care that begin to be lost in large organisations. But creativity is also seen in the development of software programmes, or in the work of Sir James Dyson, and in the world of banking and finance, developing forms of risk management, or new forms of lending suitable to enable organisations to develop and be yet more creative. An economy that burdens the creators so that they are constrained too much to be creative is not a good economy. I will come in a moment to issues around proper constraint, but the liberty of creativity is an essential virtue of a good economy.
Secondly, what Pope Benedict, as he was then, called gratuity, which is more than generosity. At the very heart of Christian belief is the idea of undeserved love that expects no return. It seems odd to speak of gratuity when speaking of the economy. But, a good economy includes a spirit of generosity that does not seek the maximisation of return, or every transaction to be carried out on a basis of exchange and equivalence. Rather, it recognises that within the economy there will be some who experience abundance and some who lack. Gratuity is therefore an area of a good economy that touches every part of society, but is activated principally amongst businesses, the third sector and individuals. It involves both philanthropy, but also a certain restraint in the maximisation of return to the logical limit. It is already widely recognised in the way our economy works.
For example, the Post Office is required to maintain branches in one form or another in areas which will never be profitable. The telephone system will ensure there are landlines for remote communities in rural areas where the revenues will never return the capital invested. Railways run with an element of the public good. Water, electricity and other utilities have an element of gratuity in them. The principle of gratuity applies, but is constantly in danger of being squeezed out unless it is affirmed and recognised as a good not only for individuals of a philanthropic bent and much wealth, but also for the businesses as wealth creators.
Gratuity is a character of God in Christian understanding. The gift of the life of Jesus Christ, and the salvation that is offered, is not on the basis of merit or exchange, our lives are not worth His, but on the basis of love freely poured out that overwhelms us with generosity. It is for us to take it or not.
Thirdly, solidarity, as I wrote in a collection of essays that has recently been published, 'On Rock or Sand?' – you may have read the newspaper coverage; some of you may have even read the book itself – is an ancient and deeply theological concept, which has somewhat unfairly been appropriated by political ideology, to the detriment of a fuller notion of its meaning. It is a concept that is deeply relevant to our current economic discussions, for at its heart is inclusivity; it is about reimaging our economic landscape so that no one is left out or left behind. It is concerned with how we value people and communities. We see solidarity perfectly embodied in Jesus Christ. He became human so that we might become divine. His ministry exemplified a commitment to the inherent dignity of all, but particularly those who society or the economy have deemed to be surplus or marginal – the poor, the infirm, the young, the old.
We find ourselves today with a somewhat bland idea of solidarity. In a remarkable paper on the financial crisis, a friend of mine called Professor Paul Dembinski, a leading economist at the University of Fribourg in Switzerland, makes this point:
“Economic discourse is focused on those who are fit for productive activity. That means that about half of any given society is not directly on the radar of economists….From the economic perspective, these groups appear at best to be beneficiaries of public transfers; at worst to be burdens and sources of cost to society. Therefore the volume of public transfers is the usual economic measurement of solidarity. Once defined in this simplistic way, solidarity appears automatically as a threat to economic efficiency…”
As I set out in some detail in ‘Building the Common Good’, it seems to me that there are four key areas of public policy which could demonstrate what an economy built on solidarity can look like, and can deliver. They give life to the notions of human dignity and the commonality of the human journey. They stir something in us that responds, “everyone deserves a chance at that.” The four areas are: a living wage, good and affordable housing, excellent education and training, and greater financial access.
Solidarity is one of those virtues of a good economy that begins to stray into the realm of where government plays an important role.
Finally, subsidiarity in a Good Economy is about asking the question ‘who is best placed to deliver this?’
A Good Economy is one in which a careful balance is struck between the key elements of the economy. Two of these elements – the state and the market – are too often offered to us as the only two possible answers to the question when it comes to economics – what the question actually is is becoming increasingly irrelevant. More dependency on cash injected on the basis of some grand political plan or strategy, or dependency on the collateral benefits of a free market, are not sufficient answers to how to build a Good Economy.
William Beveridge is best remembered for his report which birthed the post-war social security system in our country. But he wrote a second, much less well-known report called ‘Voluntary Action’, and he saw them as essentially working together - and they had been developed, by the way, in collaboration with his old friends from university days, Tawney and William Temple, probably the best and most distinguished Archbishop who has thought on social issues since the Reformation. 'Voluntary Action' reflected Beveridge's concern that the state must not take on all responsibility for care of the weak, the vulnerable or the unfortunate, as he put it. The state is good at being universal, but it can’t be personal. He understood that if the state is given too much power to shape our society or economy, it will stifle personal responsibility, and damage the development of strong communities. A Good Economy is built on the belief that we all have a role to play – although one that goes far beyond what our economic output is.
For those of you here who might have heard Jean Vanier about three weeks ago, on a Monday evening in the House of Lords, speaking of the L'Arche communities, which he founded many many decades ago, we see there that sense that he has that those who the world sees as weak, through their disabilities, are those who can bring hope and strength in a lived out community. I listened to him, along with Cardinal Vincent Nichols that evening, with once again, as every time I hear him, a sense of the horizons of the possible being rolled back, and hope in community.
An economy based on the principle of subsidiarity is therefore one in which there is a strong awareness of who does what best and collaborative working between different elements of the economy to enable the flourishing of all. It is seen in anti-monopoly legislation, in local government, in decentralisation, and in regulation that ensures accountability of huge companies to customers. It is seen also in the state not being in places which enable individuals, groups and communities to do what they are best called to do.
How then do we judge whether economic policy is helping us build a ‘good’ economy? In the shadow of the 2008 financial crisis and the realities of the ensuing Great Recession, the Church of England Synod debated – in this building – the likely impact of the crisis. It concluded that in any situation, however strained, economic policy should be judged by three criteria: is it fair? Is it generous? Is it sustainable? These are good questions to ask of all policy – whether public policy, or the policies of businesses or other groups in our society, including the policy of the church. We can, and should, ask these questions as much about levels of personal and government debt as we do of programmes that could be considered part of an austerity agenda. They get to the heart of a society, they are non-party political, and an economy for all, in which each of us and those of future generations can benefit from the opportunities available depends on their answers.
I will conclude with the words of the great 4th Century theologian St Basil the Great, when he said:
“A great torrent rushes in thousands of channels through the fertile land. By a thousand different paths make your riches reach the homes of the poor. Wealth is like water that issues forth from the fountain. The greater the frequency with which it is drawn, the purer it is, while it becomes foul if the fountain becomes unused.”
There is a possibility, a great potential, for wealth to act as life-giving water, spreading through all the channels of our economy, through the benefits of a well functioning market economy, for the benefit of all and the advancement of a truly common good.
How we make this potential an ever more effective reality in our country, how we build the foundations and values of a good economy, how we utilise wealth creation for the advancement of the common good – all of these questions require a great and innovative leap. They need a narrative that reflects the character within us, of which I have spoken, that character of creativity, of gratuity, of solidarity and subsidiarity. They need a narrative that reflects the nature of our country, that is creative, generous, imaginative, responsible and communal. At our best we are all those things and at our best we are unbeatable in our virtues.
Watch a video of the speech here