Note: I’ve also written a critical review of the whole series in one post.
Kathryn Tanner opened her 2016 Gifford Lecture Series, “Christianity and the New Spirit of Capitalism,” with an introduction to many of the broader concerns and historical developments that have shaped her approach as a theologian to capitalism. The lecture title, a play on words with Max Weber’s famous The Protestant Ethic and the Spirit of Capitalism summarized the general approach Weber utilized in his analysis, outlined the features of contemporary capitalism relevant to Tanner’s concerns, and teased out what is to come in the following lectures. This post will try to summarize Tanner’s main points and offer an analysis.
One paragraph summary: Tanner utilizes Max Weber’s approach that religious beliefs impact economic life, but for the opposite ends. Whereas Weber thought Protestantism helped capitalism, Tanner argues that it has resources to criticize many of its features. She highlights various elements of what she calls “finance-dominated” capitalism and the effects it has disciplining corporations, governments, and individuals for its own ends. Persons, under the current configuration of capitalism, are formed in the entirety of their lives for the economic ends it establishes. She thinks that a religious “counter spirit” is comparably person-forming, and that Christian notions of salvation, and the doctrine of God can begin to alternatively form persons against the corrosive effects of global capitalism.
The underlying notion, both to Tanner and Weber’s work, is that religious beliefs are formative to one’s actions and perceptions within the economic sphere of life. Weber theorized that specifically Calvinist beliefs were quite formative to the early beginnings of capitalism, even that they were necessary to its formation. Capitalism asks more than what is necessary from individuals. It calls for profit above one’s needs. One does not merely stop working once they have acquired enough to live a comfortable life; they go on generating profit long after that threshold has been reached. One was required in this way, to defer enjoyment of life to a later period so that one could make money in the present. This, Tanner argues, is a very irrational and unnatural way to organize one’s life. For Weber, “humans were dominated by making money,” mere acquisition is the goal, and this end was not subordinate to meeting one’s current needs.
In light of the features of Capitalism, Weber looked around for a type of person who would be willing to engage in the sort of behavior it required. The answer would be one whose religious interests could be met by capitalism. For instance, one that valued hard work and massive profit for the purpose of an otherworldly goal: salvation. Weber thought Calvinistic notions of double predestination were ripe for this because those people needed a way to show outward works to demonstrate their salvation, but in a way that would not be extravagant (hence, the deferment of pleasure for sake of current profit). Thus, Capitalism found its first adherents in Calvinists, or so Weber argues.
Tanner’s project is formed by a similar notion, a “hope” as she calls it, that religious beliefs might impact economic life. The truth here of religions’ potential efficacy in the world is what matters most, not the truth or falsehood of Weber’s specific thesis. However, Tanner doesn’t think that specifically ethical teachings of Christianity are all that impactful when compared to the underlying religious interests (e.g. salvation), and how one might satisfy them or what psychological sanctions could be provided thereby. She says, “religious beliefs, regardless of any obvious practical import, are not just to be believed, but lived.” They motivate action by valuing states of affairs (i.e. salvation), and they tell one how to get there. “What one believes about the world establishes in great part what it makes sense to do.” Christian beliefs might, and should, permeate all of life to establish patterns of action and recognition. In short, the main issue of the lectures is how religious beliefs impact actual life.
Tanner states that her aim is “to show how Christian beliefs might undermine, rather than support, the new spirit of capitalism.” Hinting to Weber’s work, “what Christianity gives, it can also take away.” She is critical of contemporary capitalism because of her specifically religious commitments. However, she argues that religious people are not, and should not be, the only groups concerned about contemporary capitalism.
The problem methodologically is that the current system hampers recognition of its own faults. No alternative is possible, so it says. In order to undermine capitalism as it stands today, one “needs to meet it with a counter spirit of similar power,” hence, religion as the critical force here.
In the next section of the lecture, Tanner goes into an, at times, technical discussion of the features of contemporary capitalism, which she notes is “finance-dominated.” The discussion is important, however, because it introduces some of the concepts that will be countered in later lectures, and it demonstrates why Christians should care about the current organization of our economic life. This current adaption of capitalism has its own unique person-forming capacity different from, say, industrial capitalism. It has a unique way of affecting people regarding how to view themselves and others, and it directs conduct by making them believe its ends are best. A portion of this section of the lecture appeared in the winter 2016 edition of the Anglican Theological Review, under the title “Inequality and Finance Dominated Capitalism.”
The first feature Tanner explains in the current configuration is that finance generated profit is increasingly more important. This is true even regarding non-financial firms. Tanner cites the example of traditionally non-financial firms like car companies that routinely make more money servicing and selling car loans than they do actually selling the cars themselves. There is also an increase in financial activity, the selling of stocks, derivatives, currencies, etc. The total amount of money that transfers hands on the financial markets in one day is much more than the total sum of global trade in a year. This increase in activity is partly due to the potential for oversized profits in the financial sector. One can triple their money in a single day if one makes the correct bets, but this is impossible in industrial production and exchange. This is possible partly because of the volatility of markets in which price fluctuations are constant, as well as the use of leverage (using borrowed money to purchase financial instruments). This volatility and use of leverage results in an increased potential for massive profit, and hence, why the financial sector is growing.
The second feature of finance-dominate capitalism that Tanner notes is that it is increasingly decoupled from other sectors of the economy. To avoid losing profits there, it must bypass the possible decline in profits elsewhere in the economy. Low profits elsewhere are not as relevant to the success of the financial sector. For example, in a stagnating economy, the need for loans actually increases due to hardship in, for instance, the labor sector. Further, finance has created secondary markets (e.g. the stock market) where financial instruments themselves are sold (e.g. stocks, bonds, etc.). Even mortgages are routinely sold in this way on secondary markets so that banks can unload themselves of associated risks and transfer them to others.
Tanner points out that the prices for goods in secondary markets are not limited by non-financial sectors of the economy. For example, stock prices are not directly tied to the company’s bottom line (though it may help to make a profit for other reasons). Instead, the behavior of other investors is the driving force behind demand in secondary markets. She recalls John Maynard Keynes’ analogy of the beauty contest here, in which judges are trying to pick the contestant that all other judges will pick; instead of basing their judgments on the contestant’s beauty, their actions are based upon bets concerning the behavior of other judges. In this case, secondary markets can often create self-fulfilling prophecies based upon thinking that others will buy the goods, which results in more people buying them, and the price of them therefore going up. In this way, the value of goods in secondary markets need not go up or down along with a company’s bottom line.
Even more technically (see your intro to economics prof. for more info!), Tanner cites derivatives as a financial instrument that are even further decoupled from the rest of the economy. Derivatives are instruments whose value is tied to other financial instruments. The purpose of these is to hedge against risks. For example, one can take out a derivative on one’s company to hedge against the risks associated with international commerce and the variability of currency exchange rates. Globalization has caused many companies to engage in international trade, but this creates added risk due to fluctuations in currency value where, for example, a company may lose money because of a weaker dollar compared to another form of currency in a country they do business in. Though complex, derivatives in this way can function as a sort of insurance for oneself. She also brings up the example of Credit Default Swaps which again were a form of insurance, primarily tied to the possible decline in a mortgage’s value, where one financial institution could trade these with others to hedge off risk. These are traded to generate profit in themselves apart from any benefit to non-financial institutions. Similarly, one can even bet on the economy’s decline, by say, shorting stocks to bet on a decrease in their value, and to therefore make money from economic decline.
The point of these examples and the technical discussion Tanner engages in, is to show that financial markets are increasingly set free from sagging profits in other sectors of the economy. The circulation of financial instruments is the goal, rather than production of goods and services normally construed. For example, one can make money on selling mortgages regardless of whether new houses are being produced. One only needs current mortgages to recirculate.
This second feature of finance-dominated capitalism is therefore its decoupling from the normal production of goods and services. Tanner argues that industrial capitalism was quite demand dependent; it needed high employment, etc. But finance can make money no matter what is going on in the rest of the economy. However, moving to her third point, Tanner stresses that this decoupling does NOT mean that the two spheres of the economy are irrelevant to one another.
On the contrary, finance becomes increasingly formative of other areas of economic life. In her words, “finance comes to discipline every other form of economic activity.” Tanner then outlines how this functions on three levels, corporate, national, and individual.
Corporately, this is through the mechanism of always needing to create shareholder value, i.e. to please one’s shareholders by causing stock prices to rise. Corporations’ ends are in this way generally restricted, if they are publicly traded companies, to generating benefit to its stock holders, not primarily its employees (unless they too own stocks). This, Tanner argues, entails attempting to generate maximum profit. This isn’t just a concern for covering overhead costs with enough profit for the owner to live comfortable, but is a concern to make the most money that is possible. This end usually results in downsizing and outsourcing regardless of the benefit or harm those practices entail to communities or their impact in the long-term. These types of corporate management strategies to maximize profit are not always good in the long term (e.g. one needs happy employees to function over time even if hard worked employees can generate short term profit). However, Tanner notes that the CEO’s who initiate such corporate management techniques do not care about the long term because they routinely cash out their stocks (for enormous profits) and then leave for another company. She also gives the example of the fear of hostile takeover, but I’ll spare my readers another technical discussion here. Needless to say, this fear and the actual takeover of companies results in evermore increases in cost-cutting for the bought company.
Tanner argues that governments are also disciplined similarly by their bond-holders. Because governments routinely run deficits (i.e. they don’t limit their goods and services to those paid for by tax revenue), they need borrowers to purchase bonds to make up the difference. Subsequently, governments must service these debts which requires certain levels of austerity measures. The impact of this can be particularly detrimental if the government is obligated to pay its debts instead of devoting its surplus resources to funding education, infrastructure, or welfare – they often get cut so debts can be paid.
Likewise, individuals are disciplined as well. The individual dimension is the central focus in her lecture series. They are disciplined by finance and its results as they are forced to work harder, are in fear of losing their jobs, and can no longer look to government benefits to provide a safety net. These features often lead people in these situations to take out more loans, thereby coming under the disciplining effect of debt. Directing individuals’ behavior in all of these ways is increasingly important for finance – performance is evaluated, workers worked harder, and workers are told to be self-managing, all to save costs. Importantly, Tanner notes that these disciplinary features do not just occur while one is at work, but they impact the whole of one’s life, it’s a 24/7 thing.
It is this feature to which Tanner now turns. She argues that this disciplining brings with it a distinctive spirit, to get back to the title of the lecture. Capitalism no longer needs Calvinism to justify its existence, it is self-perpetuating. This leads to Weber’s analogy of Capitalism as an “iron cage.” Once it is established, everyone is forced to adapt to it.
For Tanner, the main question here is one of subject formation. How does the current configuration of capitalism form individuals? In short, it makes us want what finance wants – profit, and to align our desires with the desires of our companies, to give just a few examples. Most significantly, capitalism wants our acting in its best interests to be perceived as the fulfillment of our own self-realization – a very important argument for Tanner’s series.
The Protestant ethic was the spirit of industrial capitalism, and it glorified hard work as a moral and spiritual virtue, was vocational, and prioritized delayed gratification. The new spirit of capitalism rewards flexibility (e.g. changing job duties, adapting to quick changes on secondary markets, etc.), but also a quite intensified work-ethic that is also moralized. It says that one’s economic woes are one’s own fault and that we are individually responsible for our fate. Tanner thinks that this contributes to an intense competition between persons due to one’s standing being in relation to others.
Further, this new spirit is absolute totalizing. Foreshadowing lectures to come, Tanner describes how within it, past, present, and future are collapsed. It makes “any radical break with the present order seem impossible.” In this regard, it is “imagination-constricting,” so that it seems impossible to imagine a different organization of our lives from the one we currently take part in.
In explaining how time is collapsed, she argues that debt collapses present and future into one’s past (one’s decision to take on debt in past dominates one’s present and future life), that the demand for short term profit collapses time into the present, and that secondary markets collapse time into the future (the profit to be gained therein). The result of all of this is that there is the perception that a non-capitalist future cannot exist.
Turning toward her own approach in attempting to counter these alarming features of contemporary capitalism, she says, “What I as a Christian theologian will attempt to do is provide a Protestant anti-work ethic. I’ll provide what I think are good religious reasons for 1. breaking the link between the right to well-being and work, 2. breaking one’s identification with one’s productive self, and 3. for breaking the time collapse that constrains imaginative possibility to the current configuration of capitalism.”
She argues that Christianity is a religion of radical time discontinuity because it promotes radical expectations of transformation. In contrast to debt and the seemingly unbreakable past that accompanies it, Christianity holds out hope for conversion to new life, baptism as death to the old man of sin, and the radical Christian hope of salvation – to be elevated to communion with God. For Christianity, salvation is not merely to be saved from present harm, but is to lead a radically disrupted life in hope that the future will be completely new. There is a large disjunction between who we were and who we will one day be.
Significantly for Tanner, these Christian notions require divine agency. God is the one who must bring about this salvation and radical transformation. In this way, the future is not merely a matter of merit due to one’s past performance. It is actually a reversal of what would have been the case with respect to sin and what one could achieve on one’s own. One’s future good fortune, unlike in capitalism, is not “merited” and we are not responsible for it; God is.
Tanner argues that Christian doctrines of God are also critical of contemporary capitalism. The Christian notion of transcendence removes the possibility of identifying the divine with any worldly order, or feature of the world. God is nothing like the world and is not an instance of things that are found within the world. “Conformity to God does not therefore lead to conformity to the way things are.” In this way, Christians are to conform to the exact opposite, in many cases, with how they are formed by finance-dominated capitalism.
Edinburgh, the Scottish University hosting Tanner’s Gifford Lectures, has their own site devoted to analyzing and discussing the lectures. giffordsedinburgh.com