Thomas Aquinas Explains Your Mortgage

Take a look at this snippet from St. Thomas:

"There are things the use of which does not consist in their consumption: thus to use a house is to dwell in it, not to destroy it. ... [A person] may grant [to another person] the use of the house, while retaining the ownership. For this reason a man may lawfully make a charge for the use of his house... The proper and principal use of money is its consumption or alienation whereby it is sunk in exchange. Hence it is by its very nature unlawful to take payment for the use of money lent, which payment is known as usury" (Summa, II.II 78.1).

He's drawing a distinction between those things whose use requires their consumption, and those which do not. Money belongs to the first category, but a house belongs to the second. Therefore, it is fair to charge a fee for the use of a house, even in the form of a mortgage, where the bank charges you interest in order to allow you to live in the house which they still 'own' until you've paid it off. You're getting some utility in exchange for your payment (namely, a place to live). On the other hand, it is not fair to charge interest for a monetary loan, because you never get to "use" what you borrow; you have to pay it all back.

As far as I can tell, by this logic, a mortgage is an appropriate agreement, but any derivative contract (such as the infamous credit default swap) is unjust. Such financial instruments are unjust because if you sell me a credit default swap, and someone defaults on the loan they owe to you, then you are obligated to pay me more than I paid you for the CDS. Ironically, that makes me the usurer; you, who constructed this financial instrument in the first place, are just a fool.

I suspect, though, that if you'd explained financial derivatives to Thomas, he wouldn't bother pointing out how purchasing credit default swaps is like usury. He'd probably just scratch his head, and wonder how people could be making money out of money, without having any real contact with the production or consumption of goods.

The Rational, Self-Interested Actor

Tonight Heather & I attended a forum on campus entitled, "Can a Good Christian be a Good Capitalist?" The panelists included someone from the business school, an economics professor, someone from Durham's renowned Self-Help Credit Union, and a Christian theologian (Prof. Hauerwas).

The responses to the question were about what you'd expect: different types of qualified affirmatives, except for Dr. Hauerwas, who said that the answer could only be Yes if you made a pretty sophisticated argument involving the contention that capitalism forces us into connection with and reliance on others. Heather helped me to understand more about what the economist was saying, which seemed to entail a belief that the capitalist system is morally neutral, and that it's a question of the "health of civil society" -- or, in Stanley-speak, the kinds of people we have formed -- that determines the extent to which it's possible for a person to be a good capitalist and a good Christian.

What was most novel and intriguing to me was something said by the economist, Thomas Nechyba (who, incidentally, was my professor nine years ago for introductory microeconomics). He said that in economics courses, they postulate "Economic Man": the free individual who pursues his self-interest above all else. However, Nechyba says that the idea is NOT that this Economic Man is the ideal hero in the economist's worldview. Rather, it's just a model that seems to describe very well how we actually behave in markets. His point, I think, was that the system doesn't require you to be a purely self-interested automaton in order for things to work smoothly; there is moral agency independent of the system. The nuance that Nechyba was trying to introduce made me think back to how I characterized the "rational, self-interested actor" in a sermon last year.

What he didn't really address was the fact that, in general, making moral decisions (e.g. using sustainably-grown materials in your business) can put you at a competitive disadvantage that will run you out of business; you'd be a good Christian, but a bad capitalist. Or, at least, a poor capitalist.

Which might bring us to a more pithy question: Can a good capitalist be a poor capitalist?

Back to the fold

The Methodist Church in England appears poised to rejoin the Church of England. Church unions of any sort are pretty rare, but even more remarkably, they are not talking about a merger; they're talking about being absorbed into the Church. As the Reverend David Gamble, President of the Methodist Conference, said, "We are prepared to be changed and even to cease having a separate existence as a Church if that will serve the needs of the Kingdom." Or, as the Telegraph describes the situation: "The head of the non-conformist denomination said it was ready to come back to the national church after 200 years apart, if it would help spread the word of God."

I think it's a remarkable gesture. Given the origins of the Methodist Church, seeing them folded back into Anglicanism makes a lot of sense. I hope that in the process of moving towards organic union, there will be some acknowledgment of the value of Wesley's movement to the Church of England. My cynical fear, however, is that what began as a renewal movement within the Church eventually became as stodgy as the Church itself, and so they figured they might as well rejoin. If the Methodist Church ends in England, you've got to reckon with its legacy; it's hard to know how to write this story.

Do theologians understand economics?

My friend Tommy sent along this link to an article from the blog of the American Enterprise Institute. At AEI, they're free marketeers through and through, so it's not surprising that the writer would be critical of any redistributive economic plan, whether theologically motivated or not.

What's really provocative about the article, however, is the contention of economist Susan Lee that theologians say too much and know too little about economics. (Lee holds a doctorate in economic history from Columbia as well as an M.A. from Union Theological Seminary.) In short, she says that theologians want to help the poor by focusing on the equitable distribution of wealth, whereas economists want to help the poor by firing the engines of free trade and "growing the pie," (or, "make the pie higher"). I can't decide if this is a kind of capitalist benevolence -- "We're going to help everybody this way" -- or a veiled threat: "If you redistribute wealth, we'll ALL end up starving." I don't have a Ph.D. in economics, which makes it hard to mount a defense of theological economics that doesn't sound like The Dude: "Yeah well, that's just, ya know, like, your opinion, man."

Goodson Chapel sermon

On January 20, I had the opportunity to preach in chapel at the Divinity School. In this sermon, I explore (perhaps inconclusively) how we might be able to read the optimistic promises of Isaiah 62 and Psalm 36 (the lectionary passages for Jan. 17) alongside the scenes unfolding in Haiti. I don't have audio, but you can read the manuscript (PDF).