Creation of Wealth

The Creation of Wealth: Recovering a Christian Understanding of Money, Work, and Ethics
Fred Catherwood

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To help others understand the ups and downs of the market, an experienced businessman shows how the economic world works.

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Preface

The human disaster of 9/11 and the Enron and other major scandals in the following year both undermine two basic assumptions of our secular society: first, that there is no absolute good and evil; and second, that there is no need of a moral order of right and wrong to underpin the precise legalities of the civil law. It is time we looked again at the moral order we have lost, at the Christian beliefs that made our society great.

It was not a canon of civil law or rules of political correctness that made America great or that created the democracy and wealth of the West. It is easy to see why Christian respect for the dignity of the individual could lead to democracy; but why, when Christians are taught not to set their hearts on riches, is Western society ten times richer than the rest of the world? Why, too, after half a century of aid, have poor countries not even begun to catch up?

Comparative wealth seems to have little to do with the possession of natural resources. North America and Latin America both have plenty of natural resources, but one is much richer than the other. Switzerland and Holland are both small countries with few natural resources but are both among the richest in the world. They have their own explanations. The Swiss say, “God gave us only rock, snow, and ice.” The Dutch say, “God gave us only sea, sand, and wind.” “But,” both say, “he gave us John Calvin, and that was enough.”

I used to wonder why, within Christendom, Protestant countries seem to be richer than Catholic countries. After all, the essential split was theological, between salvation through sacraments and salvation by faith alone. Why should that make any difference economically?

To find the answer, we have to look at the causes of the explosive economic growth of the last four centuries, that sprang up on both sides of the Atlantic wherever the new Protestant churches were dominant. In the sixteenth century, Luther in Germany, Zwingli in Switzerland, and Calvin in France contrasted the teaching of the medieval church with the teaching of the

apostles. At about the same time as the Bible was translated out of Latin into the common languages, Gutenberg invented the printing press. These two innovations put affordable Bibles into the hands of opinion leaders across Protestant Europe, and the direct words of Christ and the apostles became the basis of the new Protestant creeds and the final authority for the individual Christian.

The great Bible commentaries of John Calvin showed how one part of the Bible fitted with the other, and his Institutes of the Christian Religion summarized the doctrines of the new Protestant churches. But ordinary Christians also read the Bible for themselves. They read Christ’s teaching that every single one of us has talents, and that, whether those talents be few or many, we have a duty to multiply them; Christ’s judgment on those who buried their God-given talents was severe (Matt. 25:26-30). They read the apostle Paul’s commands, “If a man will not work, he shall not eat” (2 Thess. 3:10); and that Christians were to “redeem the time” (Eph. 5:16; Col. 4:5, kjv) and not waste it. They read all the wisdom of Solomon about “fools” and “the wise,” and soon they developed a way of life in sharp contrast to that of the medieval aristocracy, who squandered their wealth in building great houses that needed an army of servants. Protestantism became a creed of hard work and steady development of skills, and of saving and investing rather than spending. Its mark was self-discipline; and on the battlefield, a real test of personal discipline, Cromwell’s New Model Army broke the undisciplined charges of Prince Rupert’s swashbuckling Cavaliers.

Christ taught, “let your ‘Yes’ be ‘Yes,’ and your ‘No,’ ‘No’” (Matt. 5:37). Truth is the cement of all human relations; and Christians, above all, must be able to trust each other. Trade moved from bazaar bargaining for short-term profits, to long-term relationships between merchants who knew they could trust each other. Savings from a far wider range of people were deposited in the new banks, which had earned their trust, and those savings gave a solid base for the expansion of investment and trade. When King Louis XIV expelled the French Protestants, the Huguenots, in 1685, all their trading relationships remained intact and they simply moved their business base from France to one of the welcoming Protestant countries. The economic rise of Prussia, Holland, England, and New England was greatly helped by their arrival; meanwhile France, until then the richest country in Europe, went into long-term decline.

The most spectacular and the best-documented change was the introduction of the “scientific method.” In the early seventeenth century the English Lord Chancellor Sir Francis Bacon spelled out its logic, and in the second half of the century it was institutionalized in the “Royal Society.” Until then, science had been under the wing of the church, which had adopted the scientific theories of the ancient Greeks. But the new Protestants, reading the “book of God’s word,” decided that they should be guided not by intellectual theory but by studying nature, which Bacon called “the book of God’s works.” No scientific theory should be accepted unless tested and proved against nature. What Galileo actually saw through his telescope was more important than the theories of the most brilliant minds.

Their starting point was that God’s creation must reflect his nature as the Bible had revealed it. He was the one and only God, so the laws of nature would be the same wherever we found them. He was a God of order, so we would find order in nature; a God of reason, who argued cause and effect, so we would find a rational relation between the laws of nature. And God had promised Noah, after the flood, that the laws of nature would be stable until the end of time (Gen. 8:20-22). We were the trustees of nature, which a good God had given, in Bacon’s words, “for the relief of man’s estate.” So we had a duty to develop natural science for human benefit. As one writer described Bacon’s thoughts, “Investigations were to be conducted into secondary causes with utilitarian ends in mind.”

The study of “origins” was specifically excluded from the new scientific method, because it presumed to inquire into what God, in his wisdom, had not revealed.

We have only to contrast this worldview with the rising pagan view of the natural world today, to realize how specifically Christian is the scientific method. The pagan has many gods, all of them fierce; and nature is hostile, disorderly, irrational, unstable, and malign—views reflected in today’s art. Fringes of the “Green” movement see nature itself as divine and untouchable. But the greatest danger to the advance of science is that it has lost its moral roots. The development of science is no longer “for the relief of man’s estate.” It can be used to kill as well as to cure, to dominate other countries and cultures rather than to support them. The “man in the white coat” has become a sinister figure. Science has been associated with the theory of “the survival of the fittest,” the idea that was used in support of the two tyrannical ideologies of the twentieth century, communism and fascism. Christians need to place science once again in its divine framework, where it must be “for the relief of man’s estate.”

Not only science is in danger with the Christian ethic under attack, so are the other Christian beliefs that powered the West to its present wealth. The institution that most exactly reflected the Christian ethic was the learned profession. It aimed to advance the state of knowledge with every new generation, to make that knowledge serve the community, to maintain a professional code of ethics and exclude anyone who failed to keep to it. We have come to rely on the professional standards of medicine for our health, of civil engineers for our roads, of aeronautical engineers to keep us safe in the sky, and of public accountants to see that the accounts of the corporations in which we invest our money are true and fair—until the professional auditors of Enron were found to have shredded their clients’ incriminating documents. Like the pain of toothache, that lapse is a warning of hidden corruption that has to be put right as fast as can be.

The problem is not just the greed of the “independent” auditors or of the executives who ran Enron. The executives were under pressure, like all companies quoted on the stock exchange, to show a brisk increase in each quarter’s profits. We live in a materialistic and greedy society, far removed from the beliefs that powered the rise of the West. We are not satisfied with steady dividends; we want to get rich quick, so we put our brokers under pressure, they put the pension funds under pressure, and they pressure the companies they own.

In both Britain and America, greed is financed by growing trade deficits. The growth of demand can no longer be met by what we produce ourselves and has to be met instead by imports from other countries. So the growing excess of our imports over our exports has to be financed by borrowing from the Japanese and other countries that also export more than they import. The deficit is now too large to be ignored.

Under the International Herald Tribune’s headline “Widening Trade Gap May Sink US Currency” (May 4, 2002), Eric Pfanner writes, “The yawning US current account deficit, the broadest measure of the shortfall between the value of the goods and services which America sends overseas, compared with those it buys from abroad, periodically surfaces as Exhibit A on some economists’ lists of reasons the US economy and the dollar are headed for twin collapses.” He quotes Stephen Roach, chief economist at Morgan Stanley: “America’s ever-widening current account deficit is on an inherently unstable path. A correction is coming, it is just a question of when the denial finally cracks.” Pfanner comments, “If imports persistently outpace exports—and last year they did to the amount of $417 billion—the US economy is essentially living on borrowed time, mortgaging its future to foreigners who have been willing, for now, to finance America’s fling with consumption. The surplus of [foreign] investment, these economists say, is piling up like a huge debt that eventually has to be paid back.”

For the moment, the markets are used to the dollar and comfortable with its management by the Federal Reserve Bank in Washington; and there has been, until now, no alternative global currency. But, given a drop in confidence in the dollar, there is, for the first time, an alternative currency. The euro is now the official currency of eleven members of the European Union, including Germany, France, Spain, Italy, and Holland, with a population only 14 percent less than that of the United States, and a steady trade surplus. These eleven countries are often referred to as the “Euro-zone.” If greed presses too far and confidence cracks, a slide from the dollar is now only too easy.

The deficit is an economic problem that may be put right in time. But the loss of any sense of right and wrong is far more serious. The greatness of the West was built on its Christian faith, which gave our nations a moral order, telling us what was right and what was wrong. Now our new moral mentors tell us there is no absolute right and no absolute wrong. But how can we believe that after the cold-blooded murder of three thousand people on 9/11? And how can we throw over all the beliefs that have powered the success of the West?

The central argument of secular humanism is that no one’s faith can claim that it is true. Therefore secular humanism’s interpretation of religious liberty is that no one faith has any unique right to the public space in schools, universities, or anywhere else—that is, no faith except its own, because secular humanism is itself a faith and is intolerant of any other.

The Christian belief is that church and state are complementary. “Give to Caesar what is Caesar’s, and to God what is God’s” (Matt. 22:21). The church did not demand official recognition by the Roman Empire; it earned it by the behavior of Christians who were good and helpful neighbors, and by the good civic sense of its teaching. When the Roman Empire fell, the Christian church survived and earned the respect of the pagan tribes who, one by one, gave up their gods and were baptized as Christians. When, in its medieval arrogance, the church claimed the political power of the state, it became corrupt.

The right course for Christians is to “earn our way back” to that place of respect by taking care of the many human problems that have been created by the secular humanistic agenda, including the breakup of the family, the drug culture, the rise in crime, and the neglect of the poor. I hope that this book will show how vital the Christian moral order is, and why our countries must never neglect it.

Looking again at The Christian in Industrial Society, which I wrote a generation ago—the second and last American edition, On the Job, came out in 1983—those times seemed more innocent and optimistic. True, some problems seem to have melted; there seem to be fewer labor disputes, the threat of communism has gone, and the market economy is now accepted worldwide.

But it is not enough to get rid of what was bad. If we do not want something worse, we have to put back in place all that was good. This book is about the core beliefs that made the Western world and how we can put them into practice today.

Chapter 1 looks at the “Protestant work ethic,” which lifted the Bible-reading countries up by their own bootstraps through hard work, saving and investment, and development of their talents.

Chapter 2 shows how the new spirit of trust spurred trade and deposit banking and, over three hundred years, gave the West the great wealth that a growing lack of trust now puts at risk.

Chapter 3 looks at the legitimate place of government in our society and the need to separate church and state so that the church and not the state lays down the moral law.

Chapter 4 argues that democracy gives the needed swift feedback mechanism to an industrial society, but that it is no longer “for the people” but for the fundraisers who decide the candidates.

Chapter 5 looks at the case for competition in business but also at the need to prevent the development of unfair competition by big companies against the small.

Chapter 6 looks at the stock market boom and bust, at the snarling of prosperity by unrestrained greed, and argues that business needs moral moorings.

Chapter 7 shows the vast improvements that global trade brings to some and the swift disaster it brings to others, the power of the new global corporations, the grip of corruption on poor economies, and the real danger that this corruption will feed back into the West.

Chapter 8 looks at the electronic economy, which enables money to flash around the world at the speed of light, driving currency flows out of control and plunging stock markets into crisis.

Chapter 9 considers the leadership qualities needed in our swiftly changing world to recover the virtues that gave the West its leadership and greatness. The role models we will look at commanded the trust required to lead, the experience and knowledge to deal with the problems, and, above all, the faith and guidelines to keep steady in the worst crisis.

About the Author

Sir Fred Catherwood spent 11 years as a CEO of international companies, five years as Chairman of the British Overseas Trade Board, and 15 years a member of the European Parliament for Cambridgeshire, including a tenure as its Vice President. His experiences have made him a confidant to industrialists and politicians around the world. He has also chaired British InterVarsity and served as President of the British Evangelical Alliance.