Protestant practice can save capitalism

The Protestant tradition is often portrayed as the handmaiden of the capitalist system. Lutheranism’s separation of faith from work appears to inform the Protestant work ethic, which seeks material prosperity in this life while hoping for spiritual salvation in the next. Calvinist doctrine seems to take this further by suggesting that wealth is a sign of divine favour whereas poverty reflects sinfulness. Accordingly, the wealthy are predestined for redemption while the poor will receive eternal damnation for their sins.

However, both Luther and Calvin believed everyday work was imbued with spiritual significance. They saw each economic activity as a vocation through which God works to distribute his gifts, including individual talents and other ways of contributing to the common good. Far from merely chasing worldly riches, their Protestantism viewed the earthly economy as embedded in the divine economy, in which the commandment to love God coincided with the commandment to love your neighbour as yourself.

Binding them together is the idea of shared flourishing within the order of creation. This means that well-being has both an economic and an ethical dimension. Conversely, property and profit can contribute to the common good through the creation of value. Enterprise and employment provide people not just with an income but also with meaning – a recognition of their role in the economy and their contribution to society.

At the same time, the Protestant tradition contained the seeds of division between commerce and social morality. Its emphasis on the individual encouraged the idea that, after the Fall, humanity was so depraved as to be incapable of pursuing goodness without divine intervention. So God’s providence was seen as operating through the market to make vice balance vice and produce a simulation of economic harmony. One influential example of this thinking is the book The Fable of the Bees by the exiled Huguenot Bernard Mandeville, with its subtitle “Private vice, publick benefits”.

Within this thinking lay the foundation for Adam Smith’s Calvinist-influenced idea of the “invisible hand”. There is a tension at the heart of Smith’s thought between the exchange of mutual regard or esteem in society (the focus of his Theory of Moral Sentiment) and the exchange of goods and services (the focus in his Wealth of Nations). The tension arises from Smith’s conception of the market as a morally neutral space in which the balance of individual self-interest with other individual self-interest leads to a mutually beneficial outcome.

But the early twentieth-century Anglican historian R.H. Tawney argued that individual interest unchecked by a strong culture of virtue risked turning the sin of greed into an engine of insatiable acquisitiveness – a prophetic warning we would do well to heed.

Protestantism has rich resources to defend the market against excesses. In the past, as today, Protestant practices of virtue in the economy abound. At the time of the Industrial Revolution, Methodism inspired thrift, sobriety, hard work, education and a determination to delay gratification in favour of investment. These Methodist values attracted the working and middle classes, including artisans and entrepreneurs who viewed the Anglican establishment with suspicion and preferred the building of free, democratic self-organisation in small groups or mutual aid societies.

Believing in proper stewardship, Methodists rejected any opposition between rich and poor in favour of a responsible sharing of risks, rewards and resources. This ethical vision inspired many Methodists to set up their own banks and insurance companies. Going back to the late nineteenth century, a network of Methodist hospitals emerged that until today serves the community regardless of colour, class or creed.

Similarly, Quakers have nurtured apprentices and helped them set up their own businesses. Famous Quaker businesses, such as Barclays and Lloyds banks, Clarks shoes and Bryant & May matches, have a proud history of caring about their employees and establishing new schemes for housing, health and education.

But their ethical record has been tainted by recent scandals, as with Barclays’ involvement in manipulating the inter-bank lending rate Libor or Lloyds mis-selling of payment protection insurance. Such scandals suggest a hollowing out of their ethos, turning these businesses from being a force for social good founded upon Quaker ideals of restraint into an example of corporate greed.

Being part of the temperance movement, Quakers and other non-conformists pioneered new business models that continue to be relevant today. Instead of competing in price, they worked as part of fraternities to raise the quality of products such as confectionary – a sector which for over 100 years in Britain was in the hands of three Quaker businesses: Cadbury of Birmingham, Fry’s of Bristol and Rowntree’s and Terry’s of York.

Key to their ethical business was a commitment to fair prices. That was as much to do with transparency, which had been missing from barter trade, as with the commitment to good quality rather than cut-throat competition in a race to the bottom. Quakers were renowned for their pursuit of shared prosperity that benefited both the business and its employees. Customers knew they were not being ripped off and suppliers did not have to haggle over prices.

Of equal importance was the approach to workers. The Cadbury brothers, for example, built the village of Bournville on the south side of Birmingham for their employees. This model of urban development came with schools, parks and leisure facilities for workers and their families. The Cadbury firm was also one of the pioneers of pension provisions and new initiatives such as providing a staff canteen.

Knowing that a healthy workforce would be more productive and stable, Cadbury employed company dentists and doctors before the creation of the NHS. “The welfare of employer and employed is not antagonistic, but complementary and inclusive,” so said Cadbury in 1912. “Each position brings its duties and its rights.” Rather than a collection of individuals focused on their separate advancement, companies like Cadbury were more like corporate bodies committed to the mutual flourishing of their members.

There are many lessons for today’s economy. One is the importance of balancing individual responsibility with a sense of fraternity. The ethos of self-reliance among Methodists and Quakers is bound up with the emphasis on fraternal help. As Danny Kruger, government adviser and founder of the rehabilitation charity Only Connect, wrote in 2006, “Fraternity is the sphere of belonging, of membership, the sphere of identity and particularity”. Ethical enterprise is just as much a space for fraternal relations as friendly societies in the past or charities nowadays.

Another lesson is the provision of services that help people to combine their work with family life. This includes more generous arrangements for maternity and paternity leave, support for childcare as well as flexible working hours. Instead of waiting for the state to legislate, businesses could and should increase the ways they support working families.

Globalisation and the digital age are changing the context, but the fundamental task is to build a just economic and social settlement that combines new sources of prosperity with the protection of people in their families, communities and workplaces. There is much to learn from Protestant practices anchored in the dignity of labour and the sacred character of both land and life.

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Adrian Pabst is Professor of Politics at the University of Kent and Deputy Director of NIESR. He is the author of Postliberal Politics.

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