Premeeting Amsterdam - London

13th & 14th November 2013
Faith and economy and a perspective
on the economic crisis
By Johan Graafland
Professor in Economics, Business and Ethics
Tilburg University
Globalization and impotence
Church must speak
 No concrete policy recommendation
 But broader analysis in relation to debate on church and society
Backgrounds of economic crisis
Christian values
Responsibilities of Christians
Concluding remarks
Backgrounds of economic crisis
At the micro level
 Risky investments by banks
 Intransparent and complex financial products
 Inaccurate ratings by rating agencies
 Incentives to risk taking by bonus rewarding systems
At the market level
 Deregulation inspired by neo-liberal economic thought
(Friedman, Hayek)
Philosophical background
Objectivism of Ayn Rand
 Rational self-interest is the cornerstone of society
 Altruism is a vice
Never live for another person and never ask someone
to live for you
 Redistributive policies are unjust
 Anti Christian philosophy
 Inspired Alan Greenspan
Theological background of Adam Smith
Natural theology
 Invisible hand
 Well understood self-interest
 But embedded in moral framework
Virtues (prudence, justice, benevolence)
 Smith insufficiently weights potential destructive forces
of self interest
Christian values
Common good
Financial markets crowd out the social conditions that make people
Bonus culture has diminished motivation to serve the clients
 Costs of risky investments were shifted to society (no reciprocity)
 Particularly low income groups are hurt
 Attitude of admitting errors, openness to criticism and willingness to change.
Then one can learn from crisis
 Related to simplicity; serves integrity and helps to focus on what is really of
value. In modern economy complex financial products and economic systems
have become autonomous and threaten life. Making things simpler gives more
control of economic system.
 Greed was not only present in financial sector
 The crisis is not only caused by a lack of individual responsibility, but also by
systemic errors and lack of checks and balances. This indicates collective guilt.
 Still, there is also personal responsibility. Experience of God’s love creates
room for insight into own failures and motivates to change
Concluding remark
Call for reflection on our own responsibility in our economic
choices and in economic institutions.
 What is the purpose of banking?
 What do we aim at? What will make us happy?
Necessary in all our roles
 Macro: Government and political parties
 Meso: branch organizations
 Organizational: corporate governance
 Individual:
As manager
As household (responsible consumption, saving and investment)