Moral Capitalism: A Biblical Perspective

Introduction During the past several decades many crises have beset the American laissez-faire capitalist system. The savings and loan debacle cost American taxpayers $124 billion and led to the failure of more than 1,000 banks. This was followed by numerous corporate scandals involving accounting fraud and financial irregularities at such firms as Enron, Adelphia, Global Crossing, WorldCom, and Tyco International. In 2008, the largest Ponzi scheme in history, perpetrated by Bernard Madoff, also made it apparent that our financial system was not being monitored properly. The final straw, of course, has been the financial meltdown that has nearly destroyed the world economy. Millions of jobs have been lost worldwide and trillions of dollars in assets have evaporated. It is ironic that just when the world has given up on communism, it has become clear that capitalism in its current form, based on theories of pure rationality, is also in trouble. A number of scholars have been warning the American public that capitalism based solely on greed was dangerous. Robinson (2007) asserted that the single-minded pursuit of self-interest has caused much harm to society and that we should cease associating Adam Smith with this doctrine. In actuality, Smith believed that "society ... cannot subsist among those who are at all times ready to hurt and injure one another." In the book he believed would establish his reputation, The Theory of Moral Sentiments, Smith made it clear that he believed that economic growth depended on morality. To Smith, benevolence--not pursuit of self-interest--was one of the highest virtues (Pack 1991). Smith (2002: 162) argued that: Man ... ought to regard himself, not as something separated and detached, but as a citizen of the world, a member of the vast commonwealth of nature and to the interest of this great community, he ought at all times to be willing that his own little interest should be sacrificed. Alvey (1999) demonstrates how economics started out as a moral science but somehow got derailed and is no longer concerned about ethics. He quotes Sen, who discusses the discipline and says "economics has been substantially impoverished by the distance that has grown by economics and ethics." Suskind (2008) reports that Alan Greenspan, Chairman of the Federal Reserve, was at a meeting on February 22, 2002 after the Enron debacle and was upset with what was happening in the corporate world. Greenspan noted how easy it was for CEOs to "craft" financial statements in ways that could deceive the public. He slapped the table and exclaimed, "there's been too much gaming of the system. Capitalism is not working! There's been a corrupting of the system of capitalism" (Suskind 2008). Lawrence H. Summers, in a 2003 speech to the Chicago Economic Club, made the following prescient remark: "For it is the irony of the market system that while its very success depends on harnessing the power of self-interest, its very sustainability depends upon people's willingness to engage in acts that are not self-interested" (Snyder Belousek 2009). The business world will have to make significant changes to overcome its tendency toward selfishness. One way this can be accomplished is through changes in the business school curriculum. The current financial crisis has made it quite apparent, for instance, that business schools have to rethink what they are teaching (Holland 2009; Jacobs 2009; Vass 2009). Mandatory ethics courses in most MBA curricula have apparently not been very successful. One study found that graduate business students are the most likely to cheat; 56 percent of them admitted to cheating (Di Meglio 2006). Even before the financial meltdown, scholars were maintaining that "today's business schools, by elevating shareholder profit above social benefits and other concerns, may have unintentionally become breeding grounds for a generation of Gordon Gekkos" (Mangan 2006: A14-A16). …