*Posted by Joe Wooddell
- We will never bring heaven to earth, and trying to do so perfectly often results in more harm than good. This is not to say we should not do our best, but we need to keep our “live options before us,” and a perfect utopia is not a live option.
- We must measure our actions by their consequences, not merely by our good intentions. Good intentions often have horrible unintended consequences.
- Economics is not a zero-sum game. The economic pie is ever expanding.
- Wealth can be created; it is not merely transferred. And free trade is usually win-win.
- Capitalism is not based on greed, and it does not result in greed. In fact, if people want you to buy from them, they at least have to act as if they care about what you want and need. People can be greedy or not greedy under any system.
Continuing this series on Richards’s book, today we address the sixth chapter which discusses the “Usury Myth,” the belief that working with money is inherently immoral or that charging interest on money is always exploitative We also consider the question, “Hasn’t Christianity always opposed Capitalism?” To address this topic, we need to take a look at interest, usury, history, and the Bible.
The History of Interest
Einstein said compound interest is one of the greatest mysteries in the universe. With compound interest at 6%, $100 can become $3200 over 60 years. At just 7.2% $4000 becomes $256,000 in the same time period. We pay or charge interest every day when we use credit cards, pay our mortgage, or put money in our 401k. That is, we are buying and selling money. When we take out a home loan we are buying money. We are saying, “I will pay you $300,000 over 30 years if you’ll give me $120,000 today.”
But what is wrong with selling money (i.e. earning interest)? In his Divine Comedy Dante puts usurers in hell’s seventh circle, along with blasphemers and sodomites. Medieval Christians were largely against charging interest, and even the Bible talks about it. The Old Testament tells Israel not to charge interest to fellow Israelites, and the New Testament is full of references to money. 1 Tim. 6:10 says the love of money is a root of all sorts of evil. And remember, Jesus drove the money changers out of the temple.
But remember as well that throughout the bulk of history humans lived in agrarian societies and only a minority were wealthy, while most people lived at a subsistence level. Charging interest in a situation like this could kill a person! Around the 12th century, trade and travel began expanding, and it became more difficult to transfer gold and silver. Banks were invented and began issuing paper notes to represent the deposits on hand, reducing the risk of theft or loss. Banks also realized they could loan some of the money to entrepreneurs and earn a profit (interest) on that investment. Unlike in an agrarian, subsistence level society, charging interest in this situation would not kill a person. In fact, it could help people immensely. Banks began paying you for your money, and you started paying them for loans. Silver and gold became less important, paper money could do the job, and finance and banking became more representational and immaterial. It became a good bet that the paper meant something.
Slowly it dawned on people that money lent for capital was different from money lent to a poor neighbor for his survival. Catholic and Protestant thinkers began accepting “interest” as non-exploitative and legitimate in many cases. Many Christians today, however, still buy into the “usury myth”: that working with money is inherently immoral, or charging interest is always exploitative.
Working on Wall Street, working with money, or owning and running a multi-million dollar company is not necessarily immoral. Like any profession, it all depends on how it is done. Communists, capitalists, and everyone in between can be either moral or immoral. But the virtues of Christianity lend themselves to a virtuous capitalism, for Christianity teaches thrift, savings, good stewardship, and doing the best with what one has. It teaches that while man is fallen, God’s creation is still good and predictable, that private property (and not theft) is a good thing, that in spite of original sin we can be improved, and that morality is a good thing. Given all this, Christians believe in checks and balances, and they distrust utopian schemes. All this is foundational for a vibrant capitalism.
Interest and the Bible
In thinking about what Scripture says about money, context is important. The admonitions in 1 Timothy 2 and 1 Peter 3 against things like braided hair and gold jewelry are not against wealth as such, but against showing off. Old Testament teachings against charging interest were for an agrarian, static, semi-nomadic society, not a society where money could be “bought” and “sold” for investments and entrepreneurship. The principle is that we should not exploit our fellows when they are trying just to stay alive.
Jesus calling the poor “blessed” in Luke does not mean we should run out and try to be poor, any more than being blessed if we “mourn” means we should never laugh! Jesus is often hyperbolic. When he says to lend expecting nothing in return He does not mean it is wrong to work at a bank or invest in a 401k, any more than when He says to give away our cloak and coat means we should not open a clothing shop. When He drives out the money changers He is opposing the improper use of God’s house, not commerce in general. And not storing up treasure on earth simply means we should not value earthly treasure above heavenly, not that we should not have a retirement or savings account.
The take-away point for Christians is this: interest in and of itself is not evil, but don’t exploit others with it. If you are in banking or some other financial vocation do it with integrity, honesty, and virtue. And whoever you are, don’t hurt and oppress the poor just because it is easy to do so.