John Stevens - 'Eliminating the Poverty of Nations': A Response

John Stevens has written a piece titled 'Eliminating The Poverty Of Nations: Development Through Free Markets, The Right To Private Property, Democracy & The Rule of Law Are The Only Long-Term Solution'.

I was rather troubled by his ability to speak of Socialism without nuance whilst managing to be more subtle when it came to describing forms of Capitalism. Socialism and Marxism were used interchangeably whilst his own view, a self-stated branch of Capitalism, was tempered and distinguished from other types. Indeed, gainsaying Socialism with reference to Animal Farm - a book written by an avowed Democratic Socialist - is rather like rejecting Christianity based on a critique of the Baptist Union by an adherent of the FIEC. It is simply incorrect to suggest all forms of Socialism are the same. Like it or not, whatever one feels about Michael Foot, he was not advocating the politics of Stalinist Russia!

Stevens comments: 'The central question concerns the way in which prosperity, and hence economic security and well-being, is to be sought by the state for its people. Should this be through socialism or through a responsibly regulated market?'. However, these things are not in dialectical opposition - most Socialists would argue for "a responsibly regulated market" (as would most Capitalists). The issue is not whether we have Socialism or a regulated market (both sides want the latter), it is where and what we regulate that is in view. This is simply a false dichotomy. Nor is it fair to phrase the question as 'are “enterprise,” “competition”, “private” and “profit” dirty words, or the engine of economic growth and efficiency?' as many Socialists are not against those things in principle either. Rather, the question revolves around when and where those things are appropriate and what we do to help those for whom "enterprise" and "profit" do not come so easily.

Stevens' argues:

If history is anything to go by the reality seems to be that socialism consistently fails to deliver the economic utopia it promises. To me it seems that in a sinful fallen and flawed world Marxist socialism tends to deliver equal poverty for all (with the exception of the privileged party elite who run the system – cf George Orwell’s Animal Farm), whereas a responsibly regulated free market tends to deliver marginally unequal prosperity for the vast majority (with the exception that it tends to create a tiny super-rich elite). Countries that have attempted to implement a fully socialist vision through a state controlled command economy (eg USSR, Eastern Europe, Moaist China, Cuba, North Korea, Venezuela, many post-colonial African Countries) have impoverished and oppressed their people. On a global level western style liberal property-owning democracy is spreading and delivering greater prosperity for many.

Here, we see Communist regimes used to denote Socialism at large. We may argue Marxist Socialism, or Communism, is not a means to economic growth (though China would dare to be an exception). However, this is not the sum total of Socialism. With the possible exception of Venezuela, whom most observers would recognise is not so similar to the others, all these are examples of Communist regimes, rather than varied forms of Socialism. At best, this suggests Communism is a flawed system rather than showing Socialism is altogether a failure. Of course, this is not a claim with which many Socialists would disagree (cf. George Orwell's Animal Farm) for not all Socialists are Communists. The 1945-51 Attlee Ministry was avowedly Socialist, yet pursued a series of policies that couldn't conceivably be compared to any of the regimes Stevens lists. Similarly, several post-war French governments have pursued a Socialist agenda and yet could not be deemed similar to any of the above. Equally, as mentioned, Michael Foot cannot seriously be compared to Maoist China or Stalinist Russia.

Stevens continues by asserting:

Marxism and socialism fail because they do not reflect the aspirations of most people. Human beings everywhere aspire to own their own property, to have some measure of control over their lives, and to be able to better themselves and their families by enjoying the fruits of their labour, initiative and enterprise. They do not ultimately want to find their identity as part of a class collective, except when this is a necessary intermediate stage necessary for the overthrow of a ruling feudal elite who monopolise wealth and opportunity for themselves... 

As Christians it should not surprise us that the model which seems to deliver most prosperity for most people, albeit imperfectly, is liberal free market democracy, because this most closely reflects the pattern established by the creator God and enshrined in his laws for his people in Israel. This is also reflected in the prophetic hope for their future (cfMicah 4v4). These laws embed the fundamental principles of private property ownership, the rule of law and fair justice, the elimination of corruption, regularly renewed opportunity for all (jubilees, debt cancellation and land redistribution), and a measure of ongoing redistribution (both compulsory and voluntary) to care for the genuinely poor and needy. They also reflect the centrality of the family, as opposed to the state, as the basic unit of society. These principles that ought to have led to prosperity, but sadly they were never properly implemented and obeyed.

Whilst Marxist Socialism (as opposed to other forms of Socialism) may not reflect the aspirations of people, why should aspiration form the basis of political policy? The idea that aspiration and "personal betterment" are somehow inherently good doesn't strike me as Biblical at all. Many aspirations are down right sinful and most Christians would not advocate building a society on such things. Consumerism, materialism and greed are the driving forces of Capitalism and most Christians agree such things are not good Biblical values. As I recently commented here, my conclusion supported by right-wing blogger Archbiship Cranmer (except for the Margaret Thatcher bit), home ownership (a common aspiration) is not a basis for economic improvement nor should it be the ultimate goal for most people. We may argue that people "do not ultimately want to find their identity as part of a class collective" but, whilst not class-based, doesn't the gospel call us to exactly this sort of collectivism? Are we not called to be a body of believers, based on the gospel, giving to those who have need and taking from those who have means? Such a rejection of collectivism in favour of individualism - the very notion at the heart of Capitalism - seems fundamentally unbiblical and antithetical to the gospel itself.

Interestingly, Stevens concedes that the Biblical model he puts forward - which he states most closely apes liberal free-market democracy - was never implemented properly. Surely, if we are to assess Socialism (more accurately, the Communism being addressed) with reference to the "fallen world", as opposed to the ideal world, then we must do the same with the model Stevens puts forward. As with Communism, the issue he faces on his model is that it was never implemented properly. Those in power created the system and made it work in their own interests rather than for the benefit of all people. So, his model hardly escapes the same charge as the Communist system. In both cases - on both Communism and Capitalism - the issue is the same, individuals look after me and mine rather than the collective good. On a Communist system, this works itself out by making leading elites prosperous at the expense of the general population. On a Capitalist system, this works out by making those with pre-existing privilege and money more powerful and those without such things increasingly worse off.

Stevens is right to say the irony of the recent Daily Mail hoo-ha, which prompted his post, is that "no serious political party in the UK is really advocating socialism, or indeed untrammelled free market capitalism". Since Labour dropped Clause IV under the leadership of Tony Blair, the British Labour Party have not advocated wholesale collective ownership and indeed continued the privatisation plans enacted under Margaret Thatcher. Similarly, the Conservatives do no advocate a totally unregulated free-market. None of the major British parties advocate the extremes of either position. As Stevens rightly notes "only small marginal differences in overall state spending, and minor changes to the tax and benefit system, are at issue".

In a fallen world, it strikes me that free-market Capitalism simply cannot address the needs of the nation. It better serves those with entrenched privilege than those without and appeals to the more base aspirational values of materialism and greed. Any casual observation of the recent recession will show that greed is not fundamentally good and an unsupervised market has significant knock-on effects in global economies. In a system that encourages greed (usually dressed up as "aspiration"), how will the poor and vulnerable be helped? Indeed, how can we subscribe to the doctrine of Original Sin whilst simultaneously suggesting that those with lots of money will naturally be charitable and seek to look after those reliant on their support? The history of business, since the industrial revolution, has broadly not been one of caring support for workers and increased benefit to communities at large. The notable exceptions to this are usually Christian philanthropists, specifically motivated by the gospel which teaches something radically different to the values enshrined in Capitalism. Businesses, as a general rule, are very good at making money and particularly good at keeping it. It is notable that the world's most profitable companies seem to be amongst those paying the least percentage of tax - this is Capitalism at work!

Capitalism has knock-on effects for the individual. It plunges people into debt because it creates a culture of the "must-have" - again, fundamentally based on aspiration - and encourages people to own what they can't afford and seek what they needn't have. Home ownership is the worst culprit but countless examples of debt for goods can be cited. It is a sad product of the system that debt has become a business of it's own. Payday lending companies use this culture of consumerism to prey on the very poorest who who are least able to handle the debt into which they are plunged. Free-market capitalism creates such a culture - it allows businesses of this sort to thrive (free-market) and encourages the very poorest to utilise these companies because of the greed-led, aspirational, consumerist culture it promotes.

Would Socialism fare any better? Certainly not the Marxist Communism being addressed by John Stevens. However, a system that seeks to redistribute wealth - from those with means to those with need - strikes me as fundamentally biblical. A system that does not rely on good will and philanthropy to trickle down to the most vulnerable seems to be a good response to the issues presented in Genesis 3. A system that publicly owns certain enterprises - determined by fundamental need - and runs them for community benefit hardly strikes me as a bad thing. At heart, Socialism is concerned with collective benefit whereas Capitalism is concerned with the individual. Even when Scripture deals with the individual e.g. personal salvation, it is usually with an eye on the wider community (cf. 1 Jn 1:3,7). 

For my part, I am not so sure free-market capitalism is seen all that clearly in the pages of Scripture. It strikes me when the gospel is preached and people come to know the Lord for themselves the results are rather closer to Socialism than Capitalism (cf. Acts 2:41-47). That is not to say Socialism is necessarily the best system for secular governance nor to suggest Socialism should be implemented uncritically. However, when people are living as they ought, under the gospel, it appears they are closer to a Socialist mindset than a Capitalist one.

Home ownership is not the summum bonum

I am far from often in agreement with the Archbishop Cranmer blog. I do not share his unerring veneration of Margaret Thatcher, I am not perturbed by state intervention in principle and I am not slavishly tied to supporting "the market" come what may. However, despite the hagiographic title, his most recent post touches on a fundamental issue and, in the main, handles it well. The post - 'Margaret Thatcher "gave the Conservative Party intelligence and committed leadership"' - deals with home ownership and the current government's flawed attempts to boost the economy through a specific focus on the housing market.

I first touched upon the issue of home ownership back in March 2010. Here, I sought to explore pertinent issues related to whether Christians could, or should, justifiably own property. To be clear, I am not against Christian home ownership per se. However, I do think many Christians have failed to think clearly about the issues surrounding home ownership and a particularly worldly approach to property has infiltrated the church on some level. Again, that is not to say owning property is wrong per se. Nevertheless, our attitude toward home ownership may have been unduly influenced by our culture.

Cranmer's central argument concerns the government's current Help to Buy scheme. He states:

The Bishop of Manchester-designate, David Walker, said: “Help to Buy is like tackling a food shortage by issuing food vouchers rather than getting more crops planted”. And he is quite right. If any shift were needed, it is either in increasing the building of social housing or in dispelling the shame associated with renting. The Royal Family rents; the Archbishop of Canterbury rents. What is this Tory fixation with owning that which the market determines you cannot yet afford?

With this assertion, I wholeheartedly agree. Cranmer's view of this policy is ultimately correct when he argues:

It is difficult to conceive of a more peccable policy than one which lures you into a state of maximum indebtedness at a punitive rate of interest, especially when debts of such gargantuan proportions built on the shifting sand of inflated property prices were largely responsible for the global credit crunch and the state we’re in. This time, instead of financial institutions selling on the risk of sub-prime mortgages to an ever-cascading carousel of private banks, the taxpayer will act as guarantor of last resort. 

As with the bank bailouts, the shareholder (homeowner) takes the profit in times of plenty, but the poor taxpayer takes the hit in the lean years. It is even more invidious when you consider that those who take out these 95% loans will be subject to a higher rate of interest than those who are deemed to present less of a risk: the repayments will be arduous and the emotional costs very high. This is simply piling Pelion upon Ossa. At these thresholds, the ‘dream of home ownership’ can rapidly become a nightmare trap of negative equity and unsalability: the Englishman’s castle becomes his dungeon. House prices are not guaranteed to go on rising in perpetuity: the easier-credit bubble will surely burst, just as it has always done.

On all this, I agree with Cranmer.

However, it is difficult to support his view that Margaret Thatcher understood this issue well given that he ignores the fact she was centrally responsible for creating this very shame culture. For Thatcher, as with most Conservatives, home ownership represents the highest good whilst renting is for failures, identifiable principally by their lack of earnings and/or savings. Just as Thatcher responded with the words "what a luxury" having asked a student studying Ancient Norse Literature what she was reading at university, the Conservative mindset on home ownership is to justify all things in terms of money. That is, things are only of value if they can be quantified monetarily. Thus, if you do not have enough money to own property you must be of no value, a failure, because achievement is measured in monetary terms both in education (the earning power of your degree is its sole value) and in terms of income (you are of no value if you fail to earn). Indeed, Cranmer argues well that the central shift needed is "in increasing the building of social housing". However, he says this without irony having stated "Margaret Thatcher heralded a revolution in the property-owning democracy with the sale of council homes to tenants".

Underlying this whole argument is the understanding that all people need to live somewhere. The rental market is awash with private landlords covering the cost of second mortgages through the rents of those who cannot afford to buy their first home. Property prices have risen well beyond the rate of rising salaries and the average age of the first-time buyer is steadily increasing. The government's answer to this problem is to loan people a deposit, which must be returned, on a 95% mortgage with unfavourable terms in order to allow property prices to rise even further. A far more simple solution would seem to be the building of more houses, flooding the market with property which would naturally drive prices down. Sadly, successive Tory and Labour governments have singularly failed to build enough housing (social or private). Prices remain high because demand exceeds availability and the government answer, not by increasing house building projects but, by plunging would-be home-owners into ever increasing levels of debt in order to achieve the only thing assumed to be of any value - owning a home. Certainly the Bible has much to say about where we plough our money, the storing up of treasures and the placing of people into debt. 

In truth, we need to move away from the view that property ownership is the ultimate good. We do need to increase social housing - a problem exacerbated by the sale of council housing - but we also need to increase the number of private homes being built too. Moreover, we need to move away from any concept of shame in renting and value inherent in home ownership. Why should housing not be treated in the same way as any other good? Why is a house about the only piece of property to increase in value in perpetuity when almost every other depreciates? This culture - seen almost nowhere else in Europe - causes people to take themselves into untold debt in order to own property they cannot afford whilst simultaneously reducing their living standard and impeding their ability to move freely. At heart, the question we are left with is 'are mere bricks and mortar really worth it'?

Treasures on earth?

In our modern culture there seems to be an expectation that people should seek to buy property. There is a sense in which one should buy a house, wait for its value to increase and then sell it in order to move into a bigger property. It is on this basis that the recent credit crunch was portrayed as an utter disaster. Mortgage lenders restricted lending and the value of property dropped. Many are now struggling to get a foot on the property ladder, those who already own houses are concerned that their property value has severely decreased and ultimately that they have lost money.


This culture seems to have found its way into the Church. There is an expectation, even amongst Christians, that one would naturally seek to get a foot on the property ladder and even move into bigger property as the value increases. Many show their bias towards this thinking by referring to renting as 'dead money' but buying as 'an investment.' Some even seek to spiritualise the decision by claiming that buying a house is 'good stewardship.' However, how far can we say that this is really true?


Of course, if we are offered the choice between owning or renting a house, both houses having minimal differences and the cost being identitical, it is perfectly reasonable for us to buy. However, how often is this the case? In reality, to buy a home we must firstly save up a sizeable deposit, then take out a mortgage often 4 or 5 times our yearly salary and then pay interest on top of the value borrowed for 25-35 years. When one factors in the costs of maintenance and building insurance on top of this the price of buying a property is mammoth. Can we justify this amount of money as Christians?


The first point to consider is that the money spent on our property benefits only ourselves. When we tie up considerable sums in owning property we tie up money that could otherwise be directed to Christian work. If we rented, instead of bought, how much more money would we have available to give to the church, missions and evangelistic outreach?


We must also consider our motives for buying a house. Some cite the need to own property in order to provide for their old age. Jesus told us, however, not to worry about tomorrow (Mat 6:25-34) and not to store up treasures on earth (Mat 6:19). If we are concerned about the future and are sinking vast sums into our homes as a result we are failing to heed Jesus' command. Some buy into the culture of getting larger and larger properties. This, however, runs contrary to the parable of the rich fool (Lk 12:16-22). Indeed, how much more would we have to give to the Lord's work if we did not tie our money up in our homes? Moreover, is it right for us to put our money into our home in the hope that it will increase in value so that we can get a larger one? It seems that the teaching of the Bible is clear on these points.


It is also possible to argue that taking out a mortgage is a form of gambling. Many people find themselves in dire financial straits because they have calculated the affordability of a mortgage based on current rates of interest but, when interest rates change, they are unable to maintain payments. People gamble that the rate of inflation will stay low enough for them to afford mortgage repyaments. Not only is there risk involved in taking out a mortgage but the stakes with which we are playing could not be higher. Ultimately, this could run into the tens of thousands.


We must also consider how much more difficult it is to answer God's call when we are tied into property. To be called to overseas mission or into the pastorate in another part of the country is all the harder to follow when we first have to concern ourselves with selling our house. In fact, it is quite conceiveable that many would consider themselves unable to answer the call if they could not first find a buyer for their home. How skewed our logic becomes! The call of God becomes second to the sale of our property.


This skewed logic runs deeper. Some in the Church argue that going into debt is wrong. Nevertheless, where their mortgage is concerned they have a blindspot. They encourage people to take out sizeable mortgages on the one hand whilst sneering at the use of a small overdraft facility or loan on the other. Such a view is hugely inconsistent! It is almost as if a mortgage is, by some token, not considered debt despite the mammoth sums involved. If we do not believe mortgages are wrong then we cannot suggest that these other types of loan are wrong. If we insist that loans are wrong then we must equally insist mortgages are wrong. We cannot have it both ways and yet because of the property culture we seek to make it so.


So, can we as Christians really justify buying houses? It may be possible, in certain circumstances, to say that it is justifiable. Nevertheless, we must conclude that a worldly culture has infiltrated the church. Instead of relying on God we rely on our investment for the future. Instead of giving from the first of what we have, when our salary initially comes in, we give from what is left over, when we've made our mortgage payments. Is this the culture we should have adopted in the church or should we seriously reconsider whether it is right for us to buy our own home?