Capitalism appears to be in some kind of crisis. On the one hand, it has provided a mechanism for lifting people out of poverty and creating unprecedented wealth, including reducing global poverty to historically low levels. On the other, it has led to untrammelled destruction of the environment, and unrestrained inequality and individualism which has been exposed by the Covid-19 pandemic as deeply problematic.
Economic theories about this abound—but given that economics is concerned with human actions and behaviour in relation to work, saving, spending and leisure, then surely those with insight into the human condition should be able to say something valuable in this debate? What might a Christian perspective, grounded in an understanding of the human condition as set out in the Scriptures, be able to offer?
Dr Eve Poole is both a theologian and economist, having studied theology at Durham and an MBA from Edinburgh before going on to complete a PhD at Cambridge on the Church of England and capitalism. She teaches leadership at Ashridge Business School and is Third Church Estates Commissioner for the Church of England. Her recent book, Capitalism’s Toxic Assumptions: Redefining Next Generation Economics, tackles the problems with capitalism head on. Though technically well-informed, it is surprisingly readable—and I had the chance to ask her about it.
IP: You are clearly passionately concerned about the way that capitalism, as practiced in most Western economies, is doing immense damage. What has led you to this conviction from your own experience?
EP: I was brought up in Fife during the miners’ strikes, and studied theology in the early 1990s in a Durham that had had its heart ripped out. My career then took me on a grand tour of the sectors through my MBA, my work at Deloitte, and my teaching at Ashridge Business School. I saw a lot to admire in capitalism, but had a nagging sense that we were running out of time: there seemed to me to be too many losers, and too many internal contradictions for the system to hold. My initial investigations centred on the theology of management and on workplace spirituality, but there is little point moving the deckchairs if you’re on course with an iceberg.
So I decided to try to articulate the fault lines by going back in time to the mindset and worldview that incubated the blueprint for modern-day capitalism: Judaeo-Christian theology. I studied part-time at Cambridge University for a PhD in this area, which used the Church of England as a case study for a theology of capitalism. And I used this groundwork to write Toxic Assumptions, a more readable version of my general thesis, with more specificity about the problems as I saw them.
IP: You highlight seven major assumptions underlying the practice of Western capitalism for critique—and of course I think seven is a good number! Some of these (such as utilitarianism, competition) didn’t surprise me, but some (such as agency theory) were issues I hadn’t considered previously. Why did you pick these seven?
EP: Agency Theory was in fact the first of my deadly sins, and was squarely the result of my background in theology. Unless you have a very Medieval view of original sin, it is fundamentally un-Christian to assume recalcitrance as an anthropology—that is, that the primary characteristic of humanity is its unmanageablility and obstinacy—which seems to rely on a Freudian psychology that even the psychologists don’t tend to subscribe to any more. It seemed to me an outrage that we have built a whole system of employment based on the idea that humans have to be forced into line. It was this insight that first raised my suspicions about the design of the whole system: if we could be so wrong about this, where else had we made a toxic assumption?
Christian ethicists know about the limits of utilitarianism; and I had read enough on game theory to make me suspicious of an unalloyed enthusiasm for competition, but when I also discovered the role of gender in the way that competition is practiced, I knew I was on to something big. Most of the others emerged similarly, from the piecing together of various strands in my teaching and writing and from my work with companies: questions about the environmental costs of industry (externalities) and corporate responsibility (limited liability) were coming to the fore, and my fights with the MBA students to whom I taught ethics about St Milton Friedman meant I knew shareholder value was pernicious.
Any theologian worth their salt knows that usury raises questions about the price of money through the notion of opportunity cost and reasonable rates of interest; and the Scholastics’ work on this and on Just Price inspired my thinking on both externalities and on market pricing. And if you are trained in metaphysics you develop a nose for phantasms, the Invisible Hand being a particularly good example of a metaphor that has somehow been confused with God and become a scientific law to boot. I’m often asked if I missed any toxic assumptions. Perhaps I might have said more about growth, if I were writing the book again today, although it is covered to some extent in my discussion on externalities.
IP: In relation to competition, you highlight the damaging effect of masculine competitiveness in distorting markets and business competition, and suggest that involving more women in business leadership could help to address this. Is this primarily a gender issue, or more about participation and collaboration? Do you see Western capitalism as in some sense inherently anti-democratic?
EP: The issue is a mathematical one, but it remains unaddressed because of male dominance. Game Theory shows us that in general you get better outcomes if you share information, through cooperation and collaboration. Formal competition theory, however, discourages this, because it is based on a theory of the zero sum win/lose game, where to prevent ‘monopoly’ companies must be pitted against each other in perpetual combat. But most businesses cannot afford to tarnish their brands by behaving badly just to win one skirmish, and annihilation is unwise because each party depends on a strong industry to create scale and sustain the supply chain.
This need to pay attention to the future suggests a more sophisticated strategy, that is often called co-opetition: the judicious mix of collaboration and competition that characterises much professional sport. But in economic policy the zero-sum game assumption persists, reinforced by academic thinking about strategy and leadership that draws on classic texts about war and principalities, because industry, government and academia have been dominated by men for so many generations. And this feels entirely natural and normal to men, because under pressure this is how they feel: they are programmed to perceive zero sum games in any threat situation. This is why they have survived.
But when you examine the data on women and stress, you see that this is sexist: women do not typically react in this way, being hard-wired to draw people into their circle when under pressure, not to batten down the hatches and keep their cards close to their chests. So if you are looking objectively at de-risking organisational decision-making under pressure, your best bet is to put women in charge, unless it is truly a win/lose scenario where survival is genuinely at stake.
I don’t see Western Capitalism as inherently anti-democratic but it can easily become so if we allow these toxic assumptions to go unchallenged: unfettered free markets are a cloak for the rich and powerful otherwise.
IP: In relation to utility, you criticise the narrow rationalist assumptions of ethics in relation to economic theories of the past. In this, you echo the assessment made by Jonathan Haidt in The Righteous Mind. Do you agree with him that we need to have a much broader, more human, understanding of ethics and the way we make decisions in this sphere?
EP: Business ethics is unapologetically utilitarian and I found it very hard to teach ethics in a moral sense as part of an MBA that is steeped in this very partial mindset. The Harvard case study method trains students to game their responses to ethical dilemmas to optimise outcomes, so that what in fact they learn is how to choose the appropriate mask of the day in order to make capitalism win. As a theologian I was worried about their immortal souls, which suggests a very different set of deeply uncomfortable questions. I’m therefore very drawn to virtue ethics, particularly because of my work on neuroscience and leadership.
For me this is also about risk again. As in a compass, a relativist morality is susceptible to being thrown off course by the magnetic forces of expediency: but in a set of compasses, the fix’d foot of character generates a durable morality that is both more predictable and more reliable. If as Haidt argues we should entertain the values lying behind our opponents’ moral convictions before we judge them, we are more likely to be able to do so if we have worked on our own characters, rather than seeing ethics as simply a reactive and cerebral calculation of the optimal solution to a particular scenario.
IP: In each of the chapters, you offer small, practical ways in which we can shift both practice and debate. Are you hopeful that these shifts and ‘nudges’ will be effective in changing the agenda? How do you answer those who point to the way that Western capitalism had brought unparalleled prosperity, including lifting many out of poverty in the developing world?
EP: When it feels as though Something Must Be Done, we are drawn back to heroic archetypes and bold top-down actions that Look Brave. The trouble is that there is scant evidence that this approach has the intended consequences, particularly if the aim is to change what is known in the trade as a complex adaptive system. It is a huge leap of faith to imagine that a nudge here or there might have a better effect, because it doesn’t feel weighty or serious enough, particularly when everyone is looking to you for leadership.
But grand gestures seem to be more about ego than effectiveness, given the data we have, although I understand why we are drawn to them. So I hang on to my theory of change, that everything big that ever happened started small and gained momentum. This is not to say that there aren’t policy levers that can be pulled, but market changes like fairtrade and the demise of plastic straws are more sustainably driven by customer action that they could ever be by slow and clunky regulation.
And I should say that I have come to praise Capitalism, not to bury it: it isn’t terminally ill, it’s just got a virus. It’s the best hope we’ve got for addressing both global inequality and the future of our planet, if we can fix the bugs in the software in time.
IP: At a couple of points, you intriguingly hint at parts of the biblical narrative which give key insights into these issues. What role do you see for Christian theology—and the Christian churches—in rethinking the way Western economies work?
EP: To the Christian reader, most of the book is fairly obviously built on Christian insights. I needed it to have the widest possible audience, so made these implicit for Bloomsbury. My SPCK book Buying God makes these arguments more explicit: we are perfectly designed for God’s ends and we have all the tools we need to build signs of the kingdom of God into all spheres of life. Markets are just the meeting places of messages about supply and demand, and Christians are extremely well-placed to influence both of these, to create a capitalism that serves the whole world, and not just those who have more ‘votes’ in the marketplace because of their wealth.
IP: What role has your own faith played in your work and thinking in this area?
EP: I could not have written this book without the insights that theology has given me, and without the optimism that my faith provides. My rather odd career peregrinations between God and Mammon have furnished me with a very idiosyncratic viewpoint which has allowed me to spot connections that others might miss, and my hope for humanity gives me confidence that we can use these insights to build a better system.
The book was written as an encouragement that we all have role to play. All I have done is to explain the theory of change behind the salt and light of Matthew 5:13–16 so that we no longer have any excuse for inaction. We can’t just leave this stuff to the grown-ups: we are the grown-ups, and we get the system we deserve. It’s time we redeemed it.
IP: Thanks so much for your time—and for your stimulating insights into are current economic situation. I hope and pray that they are taken to heart in both the church and the city.