Last month marked the 50th anniversary of a highly influential article in the New York Times by the economist Milton Friedman. He set out what became known as the Friedman doctrine – that the only social purpose of business is to make profits for its shareholders. Prosperous free markets would deliver the greatest benefits to society, while social and environmental concerns were improper for business.
Friedman’s thinking about the primacy of shareholders influenced the ethos and legal framework of late 20th century capitalism, and has legitimised today’s giant, unaccountable corporations that drive down costs no matter the consequences for employees, suppliers, communities or the wider environment. Likewise, they seek to extract the maximum revenue from their customer base – luring people into taking out debts they can ill afford, building in obsolescence to force a repeat purchase, or even fuelling addictions.
This system is broken, and deeply in need of reform. The 2008 financial crisis was one opportunity to bring change; regulations were tightened up to reduce the risk of a banking collapse in the future, but the systemic reform needed never gained sufficient traction.
Over the last two decades many have called for a new kind of capitalism – especially around the idea of responsible businesses. These would recognise the vital contribution of other stakeholders, not just owners of capital, and while still profitmaking, share the benefits more widely with them. Responsible businesses are concerned too with minimising their environmental impact and paying their fair share of taxes locally to support the public infrastructure they rely on.
Jubilee Centre has contributed several ideas over the years, in our book After Capitalism and Transforming Capitalism from Within published by our sister organisation, which promotes the idea of a Relational Business Charter. Yet system change is hard, and vested interests are deeply entrenched; can a biblical perspective help develop the vision for an alternative or bring a tipping point closer?
I’m convinced that much of the resistance to the reform of capitalism comes from a faulty anthropology. If our culture’s understanding of what a human being is rests on the notions of autonomous individualism, homo economicus and social Darwinism, then it’s hard to refute the goal of unfettered markets and profit maximisation. But the Bible describes humanity in quite a different light.
Firstly it tells us that we are created in the image of God primarily as responsible beings. In Genesis 1:28 God confers on human beings the responsibility for stewarding this beautiful planet and developing human civilisation. We were created to look upward (to God) and outward (to others and the non-human creation) in a life of growing responsibility. The advent of sin turned our gaze inward; our default orientation became the self. Yet the biblical picture is that responsibility for others and for the planet is key to our identity. We are not free to maximise our own pleasure and happiness at the expense of others; such thinking comes not from Genesis 1 but Genesis 3 – it arose from the Fall.
The second insight is that each person is created with unique gifts and abilities; growing into maturity as a human being includes developing those talents and using them to earn a living and to serve others. It follows that a key goal for economic activity is to create opportunities for people to participate in the dignity of work by solving problems and contributing to the needs of others.
In this light, the creation of viable jobs should be a key goal for the economy; the profit-maximisation mindset treats labour as a business cost to be minimised, not a vital asset to be developed. The social costs of such an approach are all too clear as the Covid crisis is putting immense pressure on businesses, which will likely be cutting thousands of jobs in the coming months.
We could be at a pivotal moment in history, and it’s time to support calls to reform shareholder capitalism and find ways to make a responsible stakeholder approach viable. May the Bible’s insights and wisdom provide the conviction and vision we need!