Economically Illiterate Archbishops Are No Use To The Church (Or Anyone Else)


The election just became more comical thanks to the intervention of the Church of England in the form of a soon to be published collection of essays “On Rock or Sand” by the Archbishop of York. Guess what? He deplores capitalism and comes from the Marxist approach of “from each as he has, to each as he needs” redistribution. The Archbishop of Canterbury and Labour peer Lord Adonis are also contributing to the book, which is similar in tone and content to one produced 30 years ago during the Thatcherite revitalisation of this country. It seems that the Church has not noticed that socialism doesn’t work (and never has).

We’re dealing with an Archbishop so let’s start with the Bible. Specifically Matthew, Chapter 25 Verses 14 to 30; the parable of the talents. A man travelling from his estates left his three servants in charge, allocating them cash in accordance with their abilities. One got five talents, one two and the third one. (NB A talent is a huge sum, equivalent to US$500,000 today). When the owner returned and called them to account the first two had invested the money and doubled the value of his assets. They are praised.

The third, who had buried the money and kept it safe, and is castigated as a “weak and slothful servant.” The owner goes on to say that he “expects to reap where he has not sown” and takes the one talent from the third, giving it to the first. The initial interpretation of this is pretty simple – God (the landowner) is a capitalist. And quite an aggressive one at that. The Archbishop mentions Adam Smith, the doyen of free market capitalism. Smith’s “natural rate” of interest is 5%. In the parable of the talents we do not know the length of investment, but the rate of return is only less than 5% if the landlord is away for 14 years or more. If he was away for 5 years (which is still a very long time to absent oneself from ones estates) then the rate is 15%, which is the target return of today’s venture capitalists.

It was Marx who described religion as the “opiate of the masses”. The Soviet Union, the definitive Marxist state, had a long history of supressing religion, including Christianity, as the Church of England made clear at the time. Do Archbishops have any sense of irony?

So how did the Church of England manage to interpret the bible as a socialist tract? Until Henry VIII the (Catholic) church was immensely wealthy. Although some monasteries were sacked the Church of England started out pretty wealthy too; for a start it was a major landowner. Even today it owns 135,000 acres of farmland and some prime urban real estate. That is down over 90% from the 1,500,000 acres it owned in the 1870s, which implies that whatever the Church of England is good at it is an awful asset manager. Given its fundamental economic incompetence the Church of England’s pronouncements on how to run an economy need to be treated carefully. Of the cuff, the only similarly economically incompetent organisation that I can think of is the UK government, with its £1.5 trillion of debt and continuing budget deficit.

The Archbishop’s problem seems to be that inequality of wealth grows and that poverty in some cities is endemic. His solution is redistribution, although that is not what the bible advocates and neither is it what history recommends. He bemoans the loss of the “love thy neighbour” approach to life and advocates a socialist state.

But he is wrong. What better way to love thy neighbour (and neighbourhood) than by creating jobs for them? This is what capitalism seeks to do, all the time. In the past 5 years over 1,500,000 new jobs have been created, none by government. Why does capitalism do this? Because it acts in the same self-interest that the Archbishop despises but the bible endorses. More jobs makers more stuff, selling more stuff makes more profit and more profit creates more wealth (which is the object of capitalism).

The distribution of wealth is more problematic. In modern companies labour is valued and the wealth created is shared through pay and bonus. This is particularly true in the SMEs that provide the majority of employment where owner managers fear employment problems above almost everything else.  They tend to pay a good wage to train productive employees, thereby distributing the wealth that their business creates.

The cost of providing welfare in the UK last year was £250 billion. Income tax, national insurance and corporation tax raised £324 billion. So the employed and their employers are already covering welfare costs through the redistribution of their profits. So what is the Archbishop’s problem?

The replacement of God the creator of a divinely ordered society by a truly free market, with its Darwinian evolutions and extinctions, makes the world a frightening, dangerous and capricious place. Some philosophers have embraced the reality. Others, notably theologians and socialists are still struggling to understand. Pope Urban VIII had the same problem with Galileo Galilei; but we all know who had a satellite named after him.

A just society is now one in which anyone is free to make use of their talents to create wealth, rather than one in which they fit into their divinely allocated role. Whether they succeed or not is down to a combination of hard work and good luck (and, as Arnold Palmer noted, “the harder I work the luckier I get”), rather than divine reward for righteousness and prayer. The role of the state is provide clear property law and a taxation system that provides for the poor from the wealthy (more generously than the biblical landowner). The simple fact is that this is what happens in the UK, plus or minus a bit of human error. It happens (with the consent of the employed and earning) because it is better to pay to feed the poor and maintain the rule of law than to let them starve and endure riot and revolution.

The solution to poverty is employment, and employment can only come from the investment of wealth. Thus the modern government has to balance taxation for welfare with leaving enough wealth on the plate to enable further growth.  (Our government has no wealth of its own).

So with welfare covered through the existing redistribution, what is the role of the Church of England?

I don’t have an answer to this, and neither does the Archbishop of York. But he is doing no-one any favours by misinterpreting the Bible, Marx and Adam Smith.

2 thoughts on “Economically Illiterate Archbishops Are No Use To The Church (Or Anyone Else)”

  1. The irony of all this is the church has invested in the development of Conuaght village near Hyde Park, prime real estate full of trendy boutique shops just round the corner from Tony Blair’
    s gaff, a million miles away from the sink estates these god botheres should be investing if the wanted to put their money where preachy mouths are

    Like

  2. Johan
    I have no problem with the Church (or anyone else) making money. If it wanted to do good at the same time it would for example recruit and train bricklayers (of which there is a shortage) from the sink estates and give them employment on the Connaught work.
    But of course they won’t, and their asset managers will continue to generate fees while the Bishops argue that giving their money away is the answer.
    The road to penury is as paved with good intentions as the road to hell.

    Like

Comments are closed.