Redeeming Capitalism

Scott Rae: Welcome to the podcast Think Biblically: Conversations on Faith and Culture. I'm your host, Scott Rae, Dean of Faculty and Professor of Christian Ethics at Talbot School of Theology at Biola University.

Sean McDowell: I'm your co-host, Sean McDowell, Professor of Apologetics at Talbot School of Theology, Biola University.

Scott Rae: We're here with our guest today, Dr. Ken Barnes, who is the Director of the Mockler Center for Faith and Ethics in the Workplace at Gordon-Conwell Theological Seminary outside Boston, Massachusets. He's the author of a new book called Redeeming Capitalism. Ken, welcome to our podcast. We're so glad you could be with us today.

Ken Barnes: Well, it's my pleasure. Thank you for having me.

Scott Rae: Tell us a little bit about your background. You're not a theologian by training, but you've written a pretty theologically astute book entitled Redeeming Capitalism. Your background is more in business.

Ken Barnes: I am actually a theologian by training, but I'm not a career academic.

Scott Rae: That's what I meant to say.

Ken Barnes: I have three master's degrees and a doctorate, and if you told my wife I wasn't a theologian by training, she'd say, "Well, how come I never saw you all those years?" I'm not a career academic. I am a career corporate guy. I spent most of my life doing business at a very high level all over the world. My area of specialty was international business. I worked for some very large companies, and I was, for a part of that time, the guy in the corner office. I've seen the good, the bad, and the ugly of capitalism. As a theologian, as someone who about 10 years ago made the decision to go into academics full-time, I really began to question what it is about capitalism that I thought was working and what it is that I thought needed redemption. Really, the trigger event was the global financial crisis of 2008.

Scott Rae: Okay. Tell us a little bit more about how that financial crisis impacted your desire to study both the economics and the theology behind capitalism as an economic system.

Ken Barnes: Well, basically, it's because I had already made the decision to make the move into the academy before that happened, so people were trying to figure out, who is this guy, and where does he fit? Is he a theologian? Is he a business guy? By the way, at Oxford, I taught theology and I taught in the business school, both. I always had this dual role. One of the-

Scott Rae: Okay. I officially repent of saying that you're not a theologian.

Ken Barnes: That's okay, but the reason why I mentioned it again is because when the crisis happened, that's when my phone started to ring because people wanted the perspective, not of a theologian. They wanted the perspective of someone who had been in the corner office who happened to be a theologian. That's, in essence, how I ended up back in my alma mater here at Gordon-Conwell. I was the least surprised guy in the world when the global financial crisis happened.

Ken Barnes: I just sort of waited and let everybody write their books and read what the bankruptcy court had to say about the technical failures that led to the global financial crisis, all the problems with the way Lehman Brothers were structured and the way they violated their own internal debt limits and the problem was collateralized debt obligations and all that. I impact that in the book. I was much more interested in the moral failures that led to the decisions that brought about the global financial crisis because I sensed for a long time a moral vacuum at the heart of capitalism, and my research confirmed that. That's when I wrote the book.

Scott Rae: The book deals with a lot. I mean, it's really well-integrated theologically, but it deals with a lot of stuff about economics. There's a lot in the book about Adam Smith and his pivotal role. I suspect, maybe for the average person out there, the discussion about economics, they don't readily see a connection between Christian faith and economics. Why should the person listening to this podcast care about the matters of economics that you're discussing? Why does that matter so much?

Ken Barnes: Well, that is such a great question. The answer is very simple. Economics has not always been a mathematical model in science like it is today. Really, John Maynard Keynes is the person who popularized that. For most of history, economics was considered both a social and even a moral science. That's why Adam Smith is so important. Adam Smith was a moral philosopher. Even Karl Marx was a moral philosopher. Max Weber was a moral sociologist. This notion that somehow economics is only about numbers is a very modern construct and it's actually inaccurate.

Ken Barnes: God cares very much about what we do with our time and our talent and our treasure, and that's all economic sense. Economics is simply the study of how people fulfill, if you will, the social mandate of the Bible that we see right in the very beginning of the Bible where God says, "Go and multiply," and in essence, create wealth for the purposes of human flourishing. That's an important concept biblically because it means that all the things that we do with our minds, with our hearts, with our hands, how we spend most of our waking hours isn't just about feathering our own nests and making money.

Ken Barnes: It has to do with what it means to be someone who's created in the image of God who is the worker par excellence. God has given to us a moral responsibility to emulate him, if you will, as co-creators in the long grand scheme of things. That's why economics is very much a theological topic as far as I'm concerned. I give a lot of kudos to Gordon-Conwell because not too many seminaries have a chair in workplace theology and business ethics.

Sean McDowell: Ken, humor me for a minute. Give me a definition for our listeners of what exactly you mean by capitalism.

Ken Barnes: Well, again, that's a great question. Capitalism is a subject, not an object. What I mean by that is it doesn't possess any hypostasis of its own. There is no central agency behind it. You cannot really define it the way you would any other object because capitalism is nothing more than the word we use to describe the phenomenon of lightly regulated, highly monetized free markets. That's all it is. You can't say, "On this day, so-and-so invented capitalism and we followed that model ever since." That's not the way it happens.

Ken Barnes: In fact, in the book, I go to great lengths early on to lay out the evolution of economics going back to prehistoric times all the way to the present to show people that it's an evolutionary process and capitalism is not necessary. It didn't have to evolve the way it did. It just so happens, it did evolve this way, and so because it's a subject and not an object, it has no moral compass of its own, and so we must project on it the morality that we believe is important so that it functions in a way that people of faith, especially, would say, honors God.

Scott Rae: Ken, how do you respond to the person who says, "Didn't Karl Marx actually coin the term capitalism and he intended it in a derogatory fashion?"?

Ken Barnes: Yes. Absolutely. That's not uncommon. Very often, our detractors have the honor of naming us. That's not an unusual phenomenon. Marx was very critical, and I have a whole chapter on Karl Marx, although it's not to say that Marx was either purely right or purely wrong. A lot of his observations about the moral vacuum at the heart of capitalism and some of the negative social impact of the way capitalism was being practiced in Europe especially during his lifetime in the early to mid-19th century, those observations were correct.

Ken Barnes: However, he didn't actually understand how capitalism works, and that's because he misunderstood the nature of wealth. If you don't understand the nature of wealth, you can't possibly understand capitalism. That's where he goes off the rails very, very quickly, and so consequently, his recommended solution is a failed solution from the start.

Scott Rae: How did he misunderstand the nature of wealth?

Ken Barnes: Well, basically, Karl Marx viewed wealth as nothing more than the cumulative value of all commodities. He viewed wealth the way a scientist might view matter that you can neither create it nor destroy it. It is a brute fact. It exists in its entirety, and therefore, what matters is how we distribute it justly. Well, that is fundamentally wrong because if we think about what wealth is, wealth is nothing more than the delta between the amount of labor and resources necessary of subsistence and everything else, and that everything else is wealth. It can be created and it can be destroyed. You need to ensure that you create an environment where it can be created and preferably, be created in a way that serves the common good, not just the good of a very small minority of people.

Scott Rae: I think that's really helpful. I think even today there's still this notion that wealth is a zero-sum arrangement and that the size of the pie is fixed and it's all about distribution and not about wealth creation.

Ken Barnes: That's right. It's a misconception that lives to this day, but again, as I unpack, I think, very clearly in the book, where he goes wrong and why his solution is doomed to failure.

Scott Rae: Now, I think it may have been that at the time in which Marx was writing, more of the world's economy might have been actually a zero-sum arrangement, like in biblical times, I think, largely, economic life was a zero-sum arrangement, which I think creates lots of interesting tensions when we try to apply the Bible directly to our economic life today because I can't think of too many economic systems that are more different than today's than what's life was like in the ancient world.

Ken Barnes: No, that's right. As I mentioned in the book, there were markets in the ancient world, and wealth was created in the ancient world, and there was, to a certain degree, currency being used in the ancient world, but you had nothing like the economic engine we see today because you didn't have things like technology, for instance, creating wealth in ways that would've been completely unimaginable to all of our predecessors up until the 18th century, and you also didn't have the monetization that was necessary to unleash the wealth that was being created in pockets, and then ultimately, across broad spectrums.

Ken Barnes: If you were going to say, when did capitalism start, you could probably say that it was the constellation of the invention of the steam engine and the technology that followed it and functional banking which started from the Bank of England in the late 17th century that that convergence of things plus you had ... People were living longer. There was less plague. There were better roads. There were more stable governments, nations, states, et cetera, so you can start seeing the primordial ooze of capitalism as far back as the late 17th century but nothing that would be even close to what we see in the Bible, but there are biblical principles that can be applied, and that's what I talk about in the book.

Scott Rae: That's really helpful, Ken, because I suspect a lot of our listeners have wondered how come it took most of the history of civilization for human beings to figure this out, how to create wealth on such a widespread scale.

Ken Barnes: Yeah. Well, it did take time. As I said, this is why Adam Smith is so important because Adam Smith has that very question, hence the title of his second work is not Wealth of Nations as we understand it normally. It's actually An Inquiry into the Nature and Causes of the Wealth of Nations because he was asking the same question. How did this happen? He, of course, unpacks it in phenomenal detail.

Ken Barnes: I give people, I think, a pretty fair 50,000-foot view of it, enough so that they can understand how we got to where we are, how we moved away from the mercantilist system which was really a closed monopoly system where you did have most of the control very much at the center, and the purpose of wealth creation was to preserve the ability of the crown to defend itself and the gold standard was the only measurement of wealth to what we have today, which, of course, is dramatically different.

Ken Barnes: That's really because of economic liberalism. One of the interesting problems we have with terminology, as I'm sure you know, is that today, the so-called neoliberals tend to be political neoconservatives. When you're speaking about economics, the liberals are the ones who gave us free markets as we understand it. The term seem contradictory but it's important to understand them. Our neoliberal economic system today, we owe much of it to what was observed by Adam Smith.

Scott Rae: Yeah. I tend to call that the classic liberal tradition which gave us free markets and limited government and things like that. Adam Smith actually did not coin the term greed is good.

Ken Barnes: No, he did not coin that term. In fact, as I'm sure you know in the book, I have a whole section on how do we misread Adam Smith, and the problem is people take one or two verses from Wealth of Nations, and they say, "Aha, this proves that Adam Smith was an ethical egoist who believed in nothing more than self-gratification and self-interest, and you can't put a piece of paper between Adam Smith and Ayn Rand and we should just let the markets do their thing." That is a complete misreading.

Scott Rae: Like for example the well-known quote where he said, "We don't depend on the altruism of the butcher and the baker to get our food. We depend on their self-interest."

Ken Barnes: That's right.

Scott Rae: That is often taken in isolation.

Ken Barnes: Yes, and he also, when he speaks about the invisible hand, he talks about the fact that people don't get up every day and go to work trying to manipulate a particular economic end. They get up in the morning and they go to work because they have a job to do, and they participate in the vagaries of the market and they contribute to it. At the end of the day, this invisible hand, which is nothing more than an anthropomorphic description of the phenomenon of self-correcting markets, will result in the creation of wealth and human flourishing.

Ken Barnes: He was spot on, but by the same token, in his previous work, moral sentiments, he talks about the only actions that are truly praiseworthy are those that are actions of charity and those which emulate the deity and all of the benevolence of the deity. If you don't understand moral sentiments, you can't understand Wealth of Nations. He was very much a man of his day.

Sean McDowell: Ken, I'm curious why you think younger generations typically identified as, say, millennials or Gen Z, seem to be more favorable towards socialism and critical of capitalism. What do you think is taking place culturally for that seeming shift?

Ken Barnes: I don't think there's any questions that the fact that the global financial crisis happened when most of Gen Y was coming of age had a huge impact, absolutely a huge impact and they began to question these things. There are other events that have taken place. I told people that this phenomenon that we call the post-truth era is a result of a post-faith era. People have looked at the institutions that maybe our generation just took for granted, and they tested those institutions, and they've seen a lot of hypocrisy. If it's the church and it's the pedophile priest situation or it's politics, and it's a kind of political tribalism that they find very unattractive or skepticism about the deep state or whatever it might be.

Ken Barnes: They look at these things, and then they say, "You know what? I don't trust anyone or anything." They start looking for utopian solutions. Socialism in its extreme form, Marxism, these things are nothing more than utopian solutions. The one thing Marx got right, and this is what we have to remind Gen X, Gen Y, Gen Z is that Marx himself made clear that, ultimately, you had to enforce marshally his economic plan. By definition, any enforced utopia becomes a dystopia. We saw that in Eastern Europe at the end of the Cold War, but they're not old enough to remember the Cold War. They're not old enough to remember when the wall fell and totalitarian Marxism collapsed with it. We need to remind them that the utopian solutions are doomed to failure.

Sean McDowell: You titled your book, Redeeming Capitalism, which seems to imply that capitalist has been broken, but there's something about capitalism worth preserving. How has it been broken, and why preserve capitalism?

Ken Barnes: Well, the term redeeming, I used for a couple of reasons, one because it's not replacing capitalism, it's redeeming because capitalism works. There is no system that has ever created the amount of wealth that we've seen through capitalist economies working properly and all of the benefits that are associated with, but because, as I mentioned earlier, it has no moral compass of its own, there is a dark side to it. I saw the dark side up close and personal in the boardroom.

Ken Barnes: When we look at what happens when we don't have an economic system that's rooted in any form of moral certainty without any moral code, what you get is what I called postmodern capitalism, capitalism which is a victim, if you will, of the moral relativism of the age, and one which really exploits what my friend Paul Fiddes in Oxford calls a hermeneutic of suspicion. When you see that and you start seeing the greed is good mentality take over, you realize that there's sin there, and redemption is really nothing more than overcoming the effects of sin. Theologically, that's what it means.

Ken Barnes: When we talk about redeeming capitalism, we have to figure out how do we overcome the effects of sin in this economic system, and I suggest in the book that we do have tools at our disposal, and they're tools that, while people of faith would consider those tools normative, even people who aren't people of faith can and should be able to identify with them because they're part of God's common grace.

Sean McDowell: You're described in the book for different epochs of capitalism. Now, that would seem to imply we're in a certain epoch of capitalism now. What kind of epic are we in now, and in what ways does capitalism need to change in adapt in light of technology and just how people think and behave and see the world today for it to be effective?

Ken Barnes: Boy, you know what? That is just such a great question. I talk about the four epochs, the first being the traditional capitalism that was observed by Adam Smith. Then the modern capitalism which was the Protestant ethic capitalism that was observed by Max Weber. Then the current epoch which I call this post-modern capitalism, which I define as being devoid of a moral compass and resistant if not impervious to ethical constraint. What we want is a virtuous form of capitalism.

Ken Barnes: If you think about the purpose of capitalism over those epochs, it has evolved from subsistence to material to acquisition to naked consumption to what we hope would be human well-being and flourishing. If we think about the way capitalism ployed in those epochs, we went from a means-based system to a credit-based system to the system today which is built on mountains of debt, and I think we needed to evolve into a thrift-bases system where we start talking about how do we redeem money because the relationship between wealth and money has been broken. If you look at all of the different drivers of this epochs, you can see a natural evolutionary path which can bring us to virtuous capitalism.

Scott Rae: Ken, this is just a number of things that you advocate to help redeem capitalism. For one, you suggest that putting love and other virtues at the center of economic activity will go a long way. I suspect a lot of people take that as love and competition as an oxymoron when it comes to economic activity. How do you suggest putting love meaningfully at the center of economic activity?

Ken Barnes: Well, the way I do it is, first, I talk about the other virtues as well. One of the big problems with people who have written in this space before is that they have tended to concentrate in the so-called cardinal virtues of prudence and justice and courage and temperance because they somehow see those as secular and they've stayed away from faith, hope, and love because we call them theological virtues.

Ken Barnes: Well, the fact of the matter is, if you read Aquinas, Aquinas told us that those cardinal virtues are actually rooted to the soil of the theological virtues, so you can't have a properly functioning economic system without faith. Our whole monetary system, fiat money is built on faith in institutions, in honest conduct, et cetera. We need to bring faith back into the system first, and we need to bring hope back into the system because this hermeneutic of suspicion is making people so cynical that they don't see any hope for themselves so they want to trash it, but as you rightfully say, the whole thing has to be grounded in love. The problem is that we have a misunderstanding of what love is.

Ken Barnes: We have this cultural understanding of love which is a kind of greeting card sentimental version of love instead of the biblical understanding of love. The biblical understanding of love is one of sacrifice and concern for the other and doing that which is pleasing to God and that which we flex the nature and character of God. There is no dichotomy between a reasonably functioning economic system where there's competition and people play fairly according to the rules of the competition and the belief that we can still love each other and care for each other and be concerned for the best interest of each other.

Ken Barnes: Calvin really, I think, gets this best when he talks about usury. I have a big section on Calvin in the book, and Calvin's understanding of usury was incredibly different than all of Christian history before him where usury was seen as exploitative. Calvin comes along and he says, "Wait a minute, as long as you don't lend money at interest to people who are in genuine need when God calls you to give them what they need.

Ken Barnes: As long as the interests of the borrower are greater than the interest of the lender, as long as you set interest rates according to the construct of love and not just whatever the market will let you get away with, then you can charge usury which by definition is part of our economic system, and still love thy neighbor. They are not mutually exclusive at all. In fact, as I say in the book, it's the single thing that's missing most is love in the economy.

Scott Rae: Ken, one final question for you. I appreciate how articulate you've been in both defending markets but also critiquing the moral vacuum in which they are being asked to operate in today. You advocate a recovery of a number of these virtues for business and economic activity, give us your honest opinion about how optimistic you are about these virtues taking hold.

Ken Barnes: Well, I think the answer is if anyone thinks it can be done with a flick of a switch, they're nuts. Unfortunately, we're very impatient. We want to fix the economy. We want to fix government. We want to fix everything in one election cycle, and you can't do it. It took us generations to get here, so it's going to take us generations to fix it. The first thing we have to do is change the narrative, and I'm very confident we can do it. I'll tell you why.

Ken Barnes: I mentioned before that I taught at the Saïd Business School at Oxford University. Do you know one of the most important programs at Saïd Business School is the social entrepreneurship program? Even the students who aren't coming specifically for social entrepreneurship, they are coming from the market. They are coming from big corporations and they are saying, "We believe in capitalism, but we think we can do better than your generation. We think we can create capitalism that works for everybody."

Ken Barnes: They're concerned about things like impact investing and other ways to construct businesses. They talk about mutuality in the supply chain. I mean, they're coming up with really creative ideas, and then when they're actually going up and they're applying those ideas in the real world of business today. I'm confident that if we ... We don't lecture Gen Y and Gen Z. If we engage with them and we listen to their genuine concerns or we tap into the sort of general optimism in wanting something better that have experienced, I think we can turn this ship around. It's going to take people of good will and people of faith though to lead the charge.

Scott Rae: It sounds like good news and a lot to be encouraged about.

Ken Barnes: I hope so.

Scott Rae: Ken, thank you so much for being with us during this time. I think we just scratched the surface of what we want to talk to you about, so I think we'll have to have you on again here at some point. I want to remind our listeners about your book, redeeming capitalism. We'll have a link to this in the transcript of the podcast where they can go right and order that. I highly recommend it too. It's an incredibly insightful book written by someone who has a rich business background and a thoroughly trained theologian. Ken, thanks so much for being with us and we will look forward to having you on another time.

Ken Barnes: Well, it was absolutely my pleasure. Thank you and God bless. I pray Biola continues to grow through strength to strength.

Scott Rae: Thank you, Ken. This has been an episode of the podcast, Think Biblically: Conversations on Faith and Culture. To learn more about us and today's guest, Dr. Ken Barnes, and his book Redeeming Capitalism. To find more episodes go to Biola.edu/ThinkBiblically. That's Biola.edu/ThinkBiblically. If you enjoyed our conversation today, give us a rating on your podcast app and share it with a friend. Thanks so much for listening. Remember, think biblically about everything.