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Moralizing the Market? Economies of Gift in an Age of Global Finance

This paper was presented at the 2011 Telos Conference, “Rituals of Exchange and States of Exception: Continuity and Crisis in Politics and Economics.”

1. The Theological Origins of Secular Capitalism

For Max Weber, the spirit of capitalism is best understood in terms of Calvinist divine predestination. But by focusing on the Protestant work ethic, Weber’s thesis about the origins of modern capitalism is at once too broad and too narrow. Too narrow because he neglects the counter-Reformation Baroque scholasticism of influential Catholic theologians like Francisco Suárez that sunders “pure nature” from the supernatural and thus divorces man’s natural end from his supernatural finality. As a result, human activity in the economy is separated from divine deification and the market is seen as increasingly autonomous. In short, human contract is severed from divine gift.

Too broad because Weber fails to recognize the more specific, historical origins of capitalism. Those origins can—and must—be traced to Henry VIII’s dissolution of the monasteries (following his break with the Church of Rome) and the English “enclosure movement” that privatized common land. This violent redistribution of wealth to the new class of the landed gentry started the process of repeated “primitive accumulation”—expropriating the small-holding free peasantry, reducing them to wage laborers and progressively stripping them of their mutualist support structures. In turn, the process of continuing dispossession provides the surplus capital for financial investment in non-reciprocal, piratical trade (as both Karl Polanyi and Robert Brenner have documented).

Thus, Weber is right to highlight the Calvinist gospel of prosperity that conflates the elect with the wealthy and sanctifies the pursuit of power and prosperity—a justification for free-market capitalism that cuts across the liberal-conservative divide in the Anglo-Saxon West and remains influential to this day—for instance Andrew Carnegie’s 1910 Gospel of Wealth.[1] But linked to the divine predestination of the prosperous is the Calvinist separation of human contract from the divine gift of grace and the Lutheran divorce of faith and works.[2] The same dualism between transcendence and immanence underpins the Baroque Catholic sundering of “pure nature” from the supernatural and the concomitant claim that human beings have a natural end that is unrelated to their supernatural finality. Taken together, these dualistic theories view the market either as morally neutral or as positively conducive to human freedom or else as the “invisible hand” of divine providential intervention converting rival self-interest into mutually beneficial cooperation or indeed as all of the above at once (e.g., in the work of Adam Smith).

In any case, Weber’s theory is not nearly theological enough. For it was the modern dualism—which split asunder human natural goods and the divine supernatural Good in God—that brought about a market economy that is increasingly disembedded from the social bonds and civic virtues of civil society. So configured, the market was seen as a system that requires little more than a state-policed legal framework.

The underlying logic is secular, on at least two grounds. First, it subordinates the sanctity of life land to the sacrality of state and market. By contrast with the idea that life and land have a sacred dimension, the modern state and the modern market—and democracy and capitalism—operate as quasi-religions (Walter Benjamin). Second, it departs from religions and other ethical traditions that consider human and social arrangements as somehow mirroring a cosmic, transcendent, and possibly divine order. In the West, it was the secular turn of post-Reformation Christian theology that laid the conceptual foundations for the emergence of capitalism.

2. Global Finance

Nor was the idea of capitalist markets a purely abstract theoretical change brought about by shifts within theology. On the contrary, new religious ideas were embraced by the English gentry who massively increased their land holdings after the “enclosure” of common land and the dissolution of the monasteries under Henry VIII and his son Edward VI. Both these events transferred over one quarter of national wealth to the landed gentry who seized the full economic benefits of their new assets, while ignoring the old social and political duties toward the peasantry and the locality.[3]

Thus, private investment was sundered from public charity, not in the sense of handing out alms to the poor but rather as a kind of asymmetric mutual assistance in a spirit of free self-giving. Separating investment from charity foreshadowed the growing abstraction of finance from the real economy that has brought about virtually all financial crises in the last eight hundred years, including the Dutch Tulip mania of 1637 and the English South Sea Bubble of 1720.[4]

Indeed, the newly enriched landed gentry mutated into Calvinist agricultural capitalists who invested their surplus in the activities of the guild-excluded merchants who practiced non-reciprocal trade and more piratical modes of enterprise.[5] Coupled with new lending practices and state intervention, this consolidated the nexus between finance and government. In this process, material landed assets were stripped of their social, cultural, symbolic, and religious significance and increasingly commodified through their link with maritime fortune—itself closely connected with speculative wealth. From the outset then, capitalism is predicated upon the Calvinist division between earthly matter and heavenly spirit. In turn, this division is based on a literalist, non-allegorical reading of the Fall and our post-lapsarian predicament.

Nor is the idea and reality of global finance wholly new. Each new period of capitalist development was linked to new forms of lending and borrowing, starting with the Italian city-states of Genoa, Florence, Venice, and Milan in the fourteenth and the fifteenth century.[6] From the outset, capitalism is coextensive with a gradual—though not unilinear—pervasion of finance of the entire economy—including agriculture, industry, and trade. As Polanyi and Braudel have convincingly shown, the difference between traditional economies and global capitalism can be described in terms of a series of layers built on top of the everyday market economy composed of agriculture, local manufacturing, and industry. These layers—local, regional, national, and global—are marked by ever-greater abstraction. At the top sits disembodied global finance, seeking returns anywhere, uncommitted to any particular place or industry, and subjecting anything and everything to market valuation and commodification.

As I have already suggested, finance capitalism commodifies not just labor and social relations but also nature and life itself.[7] All this points to a double specularity that underpins capitalist rituals of exchange. Just as free-market capitalism is the spectacle of abstract, fetishized, idealized commodities, which replaces the everyday market economy of productive investment and symbolic meaning, so too liberal representative democracy is spectacular—a spectacle of the mass representation of general opinion and desires to the masses. All this occurs in an endless, identical repetition that equates what a society is with what it ought to be.

3. Economies of Gift Exchange

Relational patterns and structures, which are part of the idea of gift-exchange, are moving to the fore in a growing number of disciplines in the humanities and social sciences. For example, in anthropology it is argued that the idea of a purely self-interested homo economicus in pursuit of material wealth (central to Adam Smith’s Wealth of Nations) reduces the natural desire for goodness to a series of vague, pre-rational moral feelings (as set out in his Theory of Moral Sentiments). As such, it marks a radical departure from older ideas of “political animals” in search for mutual social recognition through the exercise of virtues embodied in practices and the exchange of gifts—instead of a mechanical application of abstract values and the trading of pure commodities.[8] For these (and other) reasons, individuals cannot be properly understood as separate from the relations that bring them into existence and sustain them in being. Instead, individuals are best conceived in terms of personhood, defined as the plural and composite locus of relationships and the confluence of different microcosms.

The most innovative research in contemporary economics repudiates the modern, liberal separation of private and public goods in favor of relational goods and a renewed emphasis on the reciprocal bonds of sympathy that always already tie individuals together.[9] Closely tied to this is a critique of methodological individualism and of a total mapping of individual preferences. Since neither is theoretically and empirically warranted, the entire edifice of modern political economy (after Adam Smith) and modern economic science (after Carl Menger) becomes unhinged. This cast doubt over key premises and concepts such as economics as a “value-free” and pure science, instrumental rationality, perfect information, the “rational expectations” hypothesis as well as the “efficient market” theory.[10] All this calls into question the conceptual foundations and empirical conclusions of both classical and neo-classical economics.

By contrast with the anthropological vision of homo economicus with “a natural propensity of truck, barter and exchange” (Adam Smith) that is central to modern economics, other traditions such as the Neapolitan and the Scottish Enlightenment defend a rival anthropological vision that views humans as “gift-exchanging beings” who form mutual bonds and organize society around the exchange and return of gifts. At the heart of gift exchange and economies of gift lies love. Love is a deep anthropological desire to enter into an economy of gift-exchange where gift-giving occurs in the real hope of a gift-return. So configured, love translates into practices of mutual help and reciprocal giving, thereby shifting the emphasis from the false dualism between egoism and altruism to the “radical middle” of trust, caring, and cooperation. Love as that which infuses all other virtues—theological and “classical,” moral and civic. Without love, moral and civic virtues are deficient and lack ordering to their final end in God.

This shift brings to the fore notions such as, first of all, the conflict between modern market capitalism and the natural law tradition; second, the new theological imperative to view all production and exchange ultimately in terms of the idea of relational goods that outwits in advance the false, modern liberal dichotomy between private, individual goods, on the one hand, and public, social goods, on the other hand.

Crucially, we can locate the logic of gratuitous gift-exchange and interpersonal trust at the heart of the economic system. Since Smith, the economy represents an increasingly autonomous and abstract space, consisting in market exchange based on formal contracts policed and enforced by the state and functioning according to the principle of “cooperation without benevolence,” as I have already indicated. By contrast, to suggest that the logic of contract cannot function properly without the logic of gratuitousness marks a radical departure from the legacy of Smith and his followers and a renewed engagement with the civil economy tradition of the Neapolitan Enlightenment.

For example, Coluccio Salutati’s civic humanism and his vision of a horizontal, relational orientation of humanity is always already linked to its transcendent source in God: “The two sweetest things on earth are the homeland and friends. . . . Providing, serving, caring for the family, the children, relatives, friends, and the homeland which embraces all, you cannot fail to lift your heart to heaven and be pleasing to God.”[11] This is also reflected in Genovesi’s relational anthropology and “musical metaphysics,” for example in his 1766 treatise The Philosophy of the Just and Honest, where he writes that “[we are] created in such a way as to be touched necessarily, by a musical sympathy, by pleasure and internal satisfaction, as soon as we meet another man; no human being not even the most cruel and hardened can enjoy pleasures in which no one else participates.”[12] Likewise, in his Lectures on Civil Economy (1765–67), he links the social nature of human animals to the principle and practice of reciprocity: “How is man more sociable than other animals? . . . [It is] in his reciprocal right to be assisted and consequently in his reciprocal obligation to help the others in their needs.”[13]

By contrast with Smith’s more Calvinist separation of human contract from divine gift, Genovesi and the other members of the Neapolitan School view the institutions and practices of civic life as a supernatural dynamic that seeks to perfect the natural, created order and calls for human cooperative participation. Linked to this is the insistence upon public trust or faith (fede pubblica) as an indispensable condition for socio-economic and political development within the framework of civil life and cognate notions such as honor and “the mutual confidence between persons, families, orders, founded on the opinion of the virtues and religion of the contracting parties.”[14] In this manner, Genovesi emphasizes the importance of social sympathy and reciprocity in economic contract, such that mutuality binds together contractual, proprietary relations, and gift-exchange. From its inception, the tradition of civil economy rejects any separation of the market mechanism from civic virtues and moral sentiments.

4. Practices of Gift Exchange

The genuine development of each person involves the fostering of human, social, economic, and political bonds as exemplified by practices of gift-exchange, mutual help, and reciprocal giving. As such, economics is entirely reconfigured, away from the demand- and supply-driven market production of individually consumed goods and services or the paternalistic state provision of uniform benefits and entitlements toward the co-production and co-ownership of relational goods and civil welfare.

For example, the work of Karl Polanyi or G.H.D. Cole can help us imagine and institute alternative economies that are re-embedded in politics and social relations offer a refreshing alternative to the residual market liberalism of both left and right. In practice, an embedded model means that elected governments restrict the free flow of capital and create the civic space in which workers, businesses, and communities can regulate economic activity. Instead of free-market self-interest or central state paternalism, it is the individual and corporate members of civil society who collectively determine the norms and institutions governing production and exchange. Specific measures include, first of all, extending fair-trade prices and standards from agriculture and the food industry to other parts of the economy, including finance and manufacturing. This could be done by strengthening the associative framework and giving different sectors more autonomy in determining how to implement a set of desirable goals debated and voted upon by national parliament, regional assemblies, or city halls.

Second, replacing the minimum wage with a just, “living wage” that reflects the true value of labor. Here the example of London Citizens is very instructive—a network of different local communities and faith groups that are joined together in action by the principles and practices of Catholic social teaching and which have persuaded both City Hall and a growing number of corporate businesses to sign up voluntarily and pay their staff the “living wage.”[15] By extension, groups of trading guilds with overlapping membership, in cooperation with local councils or regional governments, must be empowered to negotiate just wages for workers. Employee co-ownership, savings, and pension schemes could also be linked more closely to firms that self-organize as part of professional guilds.

Third, at the level of the G20 and pan-national blocs like the EU pushing for global capital controls in the form of the Tobin tax and bank levies (including voluntary caps on interest rates), coupled with new incentives to reconnect finance to the real economy, by promoting investment in productive, human, and social investment. More specifically, the financial industry must eschew the dichotomy of public, nationalized and private, corporate models in favor of social sector solutions such as social investment banks, social grants, or social impact bonds. The latter could encompass a wide range of areas such as projects devoted to restorative justice, local socio-economic regeneration, the environment, education, or culture.

In order to diversify the nature and range of financial services, governments and parliaments could put in place a series of positive incentives to promote cooperation between non-profit organizations, social entrepreneurs, and government agencies. Beyond current attempts to channel financial into social capital, the key is to link investment to charity (and thereby bind contract to gift), such that charitable activities and social action are not just added on and play a compensatory role for financial capitalism. Instead, each new financial investment would always already involve new assets for social activities, and a share of the profits would automatically be reinvested in social enterprise. Such an organic connection between investment and charity would transform the very way global finance operates. The trillions of pounds that the now retiring generation of baby boomers has to invest can be tapped into as a source of capital. The overriding aim must be to preserve the sanctity of natural and human life and to promote human relationships and associations that nurture the social bonds of trust and reciprocal help on which both democracy and markets depend.

5. Mutualizing Welfare

In terms of social policy, there is now a unique opportunity not just to rebuild the economy but also to transform the welfare state away from state paternalism or private contract delivery toward civic participation and community organizing in conjunction with national collective activity and state investment. Centralized statist welfare plays at best a compensatory role in relation to laissez-faire economics and at worst is secretly complicit with the extension of the market into hitherto largely self-regulating areas of the economy and society. Indeed, the centralized and corporatized welfare state merely regulates the conflict between capital owners and wage laborers without fundamentally altering relations between capital and labor. While it does provide some much-needed minimum standards, statist-managerial welfare subsidizes the affluent middle classes and undermines (traditional or new) networks of mutual assistance and reciprocal help among workers and within local economies. Today, by contrast, a renewed emphasis on the principles of reciprocity and mutuality can translate into policies that incentivize the creation of mutualized banks, local credit unions, and community-based investment trusts.

Indeed, Christian socialists like Karl Polanyi warn against the fallacy of appealing to a welfare model that traps the poor in dependency and redistributes income to the wealthy. At the hands of former Conservative Prime Minister Margaret Thatcher and the New Labour party of Tony Blair and Gordon Brown, the welfare state was first rationalized and then deployed to fashion “the freely-choosing reflexive and risking individual removed from the relational constraints of nature, family, and tradition,” as John Milbank has rightly remarked. At a time of fiscal austerity, aging populations and the ballooning deficits of social security and pension systems, the social-democratic left must look beyond redistributive policies to asset-based welfare and decentralized models that foster human relationships of communal care and mutual help—rather than state paternalism or private contract delivery.

For example, it is possible to envisage a system that combines universal entitlement with localized and personalized provision, e.g., by fostering and extending grassroots initiatives like “Get Together” or “Southwark Circle” in London that blend individual, group and state action. Both initiatives reject old schemes such as “befriending” or uniform benefits in favor of citizens’ activity and community-organizing supported by local council—instead of being determined by central target and standards. The link between different actors and levels is neither abstract, formal rights and entitlements nor monetarized, market relations but instead human relationships of mutuality and reciprocity. Citizens join welfare schemes like social care as active members who shape the service they become part of rather than being reduced to merely passive recipients of a “one-size-fits-all,” top-down model. Southwark Circle works on the principle that people’s knowledge of their neighborhood, community, and locality is key to designing the provision and delivery of welfare. Services are delivered involving civic participation, social enterprise (like the company Participle), and the local council.

By contrast, state paternalism or private contract delivery cost more to deliver less, and they lock people either into demoralizing dependency on the state or financially unaffordable dependency on outsourced, private contractors. The reason why civic participation and mutualism costs less and delivers more is because it cuts out the “middle man”—the growing layers of gate-keepers such as doctors, social workers, and bureaucrats who assess people’s eligibility and enforce centrally determined standards and targets instead of providing services that assist genuine individual needs and foster human relationships. But since such models require upfront state investment and continuous involvement of the local council, the state is neither eliminated nor simply retrenched. Rather, the vision of civic participation and mutualism is inextricably linked to the decentralization of the state in accordance with the twin Catholic Christian principles of solidarity and subsidiarity (action at most appropriate level to protect and promote human dignity and flourishing). A genuine alternative to the prevailing options must eschew both conservative paternalism and liberal laissez-faire in favor of something like an organic pluralism and a radical communitarian virtue ethics that blends a hierarchy of values with an equality of participation in the common good.


1. See H. Richard Niebuhr, The Social Sources of Denominationalism (New York: Holt, 1957), esp. pp. 94-95 where he suggests that there is a “harmony of the Calvinist conception of individual rights and responsibilities with the interests of the middle class” and “Laissez-faire and the spirit of political liberalism have flourished most in countries where the influence of Calvinism was greatest.” Cf. William E. Connolly, Capitalism and Christianity, American Style (Durham: Duke UP, 2008), pp. 17-68.

2. Marcel Hénaff, Le prix de la vérité: le don, l’argent, la philosophie (Paris: Ed. Seuil, 2002), pp. 351-80.

3. I have argued this in greater detail in my current book project, The Politics of Paradox: Beyond Secularism, chap. 2, forthcoming.

4. Charles P. Kindleberger, Manias, Panics, and Crashes: A History of Financial Crises, 5th ed. (Hoboken, NJ: John Wiley & Sons, 2005); Carmen M. Reinhart and Kenneth Rogoff, This Time is Different: Eight Centuries of Financial Folly (Princeton: Princeton UP, 2009).

5. Robert Brenner, Merchants and Revolution: Commercial Change, Political Conflict and London’s Overseas Traders, 1550-1653 (London: Verso, 2003), pp. 3-37. In this paragraph I draw on arguments made by John Milbank in his “A Real Third Way: For a New Meta-Narrative of Capitalism and the Associationist Alternative,” in Adrian Pabst, ed., The Crisis of Global Capitalism: Pope Benedict’s Social Encyclical and the Future of Political Economy (Eugene, OR: Cascade, 2010), chap. 1, in press.

6. John Hicks, A Theory of Economic History (Oxford: Clarendon Press, 1969), pp. 47-57; Giovanni Arrighi, The Long Twentieth Century: Money, Power, and the Origins of the Our Time (London: Verso, 1994), pp. 85-96.

7. Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon Press, 2000 [orig. pub. 1944]), pp. 35-58; Fernand Braudel, Civilisation matérielle, économie et capitalisme, XVe-XVIIIe siècle (Paris: Ed. Armand Colin, 1979).

8. Polanyi, The Great Transformation, pp. 45-70; Cf. Hénaff, Le prix de la vérité, esp. pp. 351–80.

9. Luigino Bruni and Stefano Zamagni, Civil Economy: Efficiency, Equity, Public Happiness (Bern: Peter Lang, 2007), pp. 45-99; David Halpern, The Hidden Wealth of Nations (Cambridge: Polity Press, 2010), pp. 56–123. The emphasis on relationality and sympathy develops on-going research on the cooperative instincts of humans and (other) animals in a stronger metaphysical and political direction. It also qualifies cruder distinctions between “bonding” and “bridging” in the work of Robert Putnam and others.

10. Ernesto Screpanti and Stefano Zamagni, An Outline of the History of Economic Thought (Oxford: Oxford UP, 2005), pp. 43-71, 145-211.

11. Coluccio Salutati, quoted in Bruni and Zamagni, Civil Economy, p. 47.

12. Antonio Genovesi, Della diceosina o sia della filosofia del giusto e dell’onesto (Milan: Marzorati, 1973 [orig. pub. 1766]), p. 42.

13. Antonio Genovesi, Lezioni di commercio o sia di economia civile, ed. M. L. Perna (Naples: Instituto Italiano per gli studi filosofici, 2005 [orig. pub. 1765-67]), part I, chap. 1, §17, p. 14.

14. Genovesi, Lezioni di commercio o sia di economia civile, II, chap. 10, §5, p. 132.

15. Austen Ivereigh, Faithful Citizens: A Practical Guide to Catholic Social Teaching and Community Organising (London: Darton, Longman & Todd, 2010).

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