Calvinism and Capitalism

October 22, 2011
The Bright Sun Blue Sky Clouds
Published in The Times, 22nd October 2011

Here is the problem. To avoid recession we have to give the economy a boost, which means spending more, which means borrowing more, which means higher levels of debt, which is what got us into trouble in the first place.

To put it the other way: in many Western economies individuals and governments have built up unsustainable levels of debt. To reduce them they must spend less and save more, which means lower consumer demand, lower government expenditure, lower employment and lower profits, which involves more need for state support, which is where we came in. Whatever economics is, it isn’t simple.

Part of the problem is that economics is not physics. It’s not about matter in motion. It’s about human beings, and humans are not simple. They have a history. One generation is not like the next. The people who create economic growth are often not the ones who enjoy it.

The German sociologist Max Weber famously argued that it was “the Protestant ethic,” Calvinism in particular, that gave rise to “the spirit of capitalism.” It combined three attitudes essential for the emergence of a new order. First it saw work as a vocation and a way of serving God. Second it frowned on luxuries and celebrated thrift. Third it saw earthly success as a sign of Divine favour.

The result was a whole class of wealth creators – Benjamin Franklin was the role model – who worked hard, saved and invested, fuelling a revolution in production in England and the United States. Hence the paradox: It was not consumerism that led to wealth-creation but its opposite, Puritanism.

We can go deeper. In a memorable research exercise, the 1972 Stanford Marshmallow Experiment, four year old children were presented with a test. They were offered a marshmallow, but told that if they waited twenty minutes before eating it, they would receive an additional one.

It was a neat and excruciating trial. Some of the children gave in to temptation immediately. Others did all they could to fight it. They closed their eyes, turned around, or even stroked the marshmallow, pretending it was a pet. Roughly a third succeeded in waiting the twenty minutes and received their reward.

Simple enough, but what made the test a classic of its kind was that a series of follow-up studies was done of the children, years later. It turned out that their behaviour at age four was a highly accurate predictor of their later success in life. The children able to resist the temptation were – ten and even thirty years later – psychologically better adjusted, more dependable, scored higher grades in school and college and had more success in their careers. The differences were measurable over a lifetime. Success depends on impulse control, the ability to delay gratification, which is precisely what a consumerist culture undermines. At every stage, the emphasis is on the instant gratification of instinct, the must-have handbag, the new generation smartphone, next year’s designer trainers. In the immortal words of the pop group Queen, “I want it all and I want it now.”

Worst of all, our children are being groomed to be mini-consumers. They are being taught by every siren signal of our culture that they are entitled to the marshmallow without delay. A whole culture is being infantilised.

The best commentary on all this was given by Moses in the book of Deuteronomy. He is addressing the next generation, the children of those who had been liberated from slavery. He tells them, surprisingly, that the real trial is not poverty but affluence. Affluence dulls the senses. It makes you forget where you came from. You start taking prosperity for granted, not realising how vulnerable it is. Bad things begin to happen. Inequalities grow. The social bond becomes weak. The nation forgets who it is and why.

Moses therefore restates a series of commands designed to teach the Israelites how to control their impulses and safeguard the future. Rest every seventh day. Cancel debts every seventh year. Place spiritual, not material, values at the heart of society. Fight poverty. Pursue justice. Treat employees decently. Care for the widow, the orphan and the stranger. Ensure that everyone has dignity. Deuteronomy is not about short term growth but about long term sustainability.

Ultimately, the wealth of nations depends on more than economics. It depends on the degree to which a culture teaches us to act today for the sake of blessings tomorrow: a hard lesson but a necessary one.