Rediscovering the 'Spirit' of Capitalism

by Dr James Corah

Posted: 6 Jul 2011

Rather than approaching the economy and Christianity as being separate entities this article will look at how they interact and the opportunities, and responsibilities, that this creates. In so doing it will highlight the role that the Church and its congregations can, and do, play in implementing Christian values into the economic system.

One legacy of the ongoing financial crisis has been the re-emergence of debates surrounding the role that 'morality', 'society' and, the focus of this article, 'religion' should play within what can broadly be termed as 'capitalism'. From a Christian perspective - for we should not forget that other religious teachings offer pertinent alternatives to the excesses and abstractions of recent financial capitalism (see for instance Maurer's excellent 2005 account of the key tenets of Islamic finance) - organizations such as St Paul's Institute have been formed to provide a forum through which this debate can play out and esteemed authors from theologians, to individuals involved in advocacy groups, and Christian investment practitioners have contributed to the debate.

However, I will take a different approach. It is my argument that by asking, or debating, what religious morals can do for capitalism (or, indeed, what the rejection of them did to it) the debate has run the risk of creating an artificial dichotomy. In many cases it has treated contemporary Christianity and capitalism as being separate entities; portraying capitalism as some large 'untouchable monster' not something that, just through our everyday lives, all of us interact with on a daily basis. Instead of this separation I will argue that the Church (both as a congregation and as a formal institution) is a key actor, or constituent part, of the capitalist economy. I will thus suggest that the key to achieving a more moralistic economic framework, is a better understanding of the role that we all play in shaping capitalism and further implementation of our own moral patterns - be they Christian or otherwise - within our economic activities. The article will now move on to identify this interaction of Christianity and capitalism, first conceptually and then practically, before providing a tentative conclusion.

In regards to the conceptual, the most pertinent work to note is that of Max Weber's early twentieth century book upon 'The Protestant Ethic and the Spirit of Capitalism'. Within this work Weber famously contended that capitalism, as a system, was itself initially a by-product of, and thus inherently tied to, puritan protestant beliefs. He stated that four principles of the Puritan belief system (ascetism, industriousness, rational action, and the spirit of capitalism) provided the ideal social environment for the development of the economic system.

First, he claimed that ascetism - the principle of being against, 'the spontaneous enjoyment of life and the pleasure existence has to offer' - when coupled with the second notion, 'industriousness', led to the first round of capitalist accumulation. To further explain Weber argued that the Puritan faith emphasised the virtues of 'work' and 'productivity' to the extent that 'Godliness' was seen as being, 'next to industriousness'. For him, this created a large labour pool of people willing to work for little financial reward and the unwillingness to spend money on enjoyment led to the stockpiling and concentration of wealth.

Third, Weber argued that Christianity was instrumental in the creation of the rational framework for economic transactions to be processed. Finally, and most importantly for this article, Weber argued that the 'Spirit of Capitalism' was essential. This was a moralistic, and ethical framework, based upon Christian teachings through which all economic transactions were conducted. Weber argued that the shared moral system of Protestantism acted as a guarantee of character and meant that one could be confident in the satisfactory completion of a transaction.

However, once it was institutionalized, Weber argued that Capitalism no longer required 'the spirit' as trust in the system was established and the rational, capitalistic tendency for competition, based upon providing the same item for a lower price, replaced religious ethical considerations. The work of Weber, thus, highlighted a clear route through which Christianity and Capitalism initially interacted. I will now move on to provide contemporary examples of this relationship.

The first of these examples relates to the Church as an institution. Despite popular narratives of secularization and decline the Church, as an organization, remains a substantial participant within the UK economy. In order to continue to operate each of the major denominations are required to raise a significant amount of capital each year. For instance the Church of England, as the largest English denomination, is required to raise capital in excess of £1billion per year.

This fiscal requirement entails that the Church, itself, has to participate in the economy and does so predominantly in two manners. First, the largest source of income is that of congregational giving. For this the Church is reliant upon both the continued generosity of its attendees, and thus their continued successful participation in the wider capitalist system. Second, the Church participates directly in the financial system through its investment assets which are required to continue to provide an income.

Indeed, as an institutional investor the Church remains a significant actor within the financial system; the combined investment assets of members of the Church Investors Group, who represent many of the mainstream denominations in the UK and Ireland, total over £12billion. The Church of England alone holds investment assets of over £8billion. Moving away from the Church as an institution to concentrate upon its members it is possible to identify a further significant interaction between beliefs and financial capitalism; pensions.

In addition to their interactions with the economy through employment and consuming products (in which many members of congregations implement Christian values by choosing products such as fair-trade), the congregation of the Church are significant actors in financial capitalism themselves, and consequently have an opportunity to leverage change, through their pensions. Indeed, academics, such as Clark and Hebb (2004), have identified the growth of private pension funds as institutional investors arguing that these funds have created previously unthinkable pools of capital to the extent that they allow their managers to 'aggressively challenge the management of [the] corporations in which they invest'. As members of these pension schemes, and thus the ultimate owner of a percentage of the shares in the companies in which they invest, congregations thus have a clear link to these companies and thus have an opportunity, through their pension provider, to influence the dialogue with corporate managers along lines commensurate with their moral beliefs.

By way of conclusion I would like to restate the fundamental importance of the inter-linkages between the Church and the economy; without participating successfully in capitalism the Church would be unable to raise the income necessary for it to continue. Such a position runs contradictorily to many of the moralistic accounts of the financial crisis that have portrayed the Church as some outside force that, should their teachings be applied to capitalism, would solve the economy's ills and inequalities.

The Church is, by requirement, already integrated into the system. Realigning the debate in this manner is, however, not purely an academic exercise. Nor is the position within the capitalist system de facto negative (although as a co-constituent part of the capitalist economic system one is to some extent complicit with its actions). By accepting that the Church is inherently linked to, and acts as somewhat of an owner (maybe creator) of, the economic system it is able to leverage a degree of voice.

For example, whilst the Church's investments exist primarily to raise the necessary funds to continue their work, organizations such as the Church of England Ethical Investment Advisory Group and the Methodist Church Joint Advisory Committee on the Ethics of Investment engage in a dialogue with the companies in which their respective Churches invest in order to promote better implementation of Christian values. In addition, the increasing power of pension funds provides an opportunity for members of congregations to attempt to integrate their moral beliefs into the financial system themselves through either stressing their interests to existing pension fund managers or the active selection of 'ethical' financial products (for examples of how this can be achieved please see the website of the organization FairPensions,

It is thus my argument that the Church's position as a part of capitalism offers it a clear position through which it can engage for change, and it is through such engagement that it may be possible to recreate the moral 'spirit of capitalism' that all participants in this debate have been striving for.

About this author

James is an Ethical and Responsible Investment Analyst at CCLA Investment Management. He is also an Industrial Fellow at the University of Nottingham and is Secretary to the Church Investors Group.


The opinions expressed in this article are those of the author, and do not necessarily represent the views of St Paul's Institute or St Paul's Cathedral.