The great financial crisis: A biblical diagnosis

May I draw readers’ attention to an excellent article, ‘The great financial crisis: A biblical diagnosis’ in the Cambridge Papers series?

Paul Mills is always stimulating and this paper in particular, building on his earlier articles on interest and debt, is profound in its diagnosis and challenging in its recommendations.

I have just summarized some highlights here majoring on personal implications but the whole (4,000 word) paper (including the sections on church and societal implications) is well worth careful examination by any thinking Christian who wants to apply a biblical mind to personal, public and global finance.

Summary

‘The self-destructive tendency of a debt-based financial system is being retaught with a vengeance by the current financial crisis. To diagnose our current plight, this paper expounds the biblical teaching on debt, interest, and finance; explains what is really going on from a relational perspective; and draws applications for the Christian, the church, and society.’

Introduction

The financial crisis working its way through the US and Europe demonstrates once again the extreme danger that debt-based finance poses. The very self-government of supposedly free nations, such as Greece and Ireland, is being suborned. This paper sets out a biblically-based alternative to conventional financial thinking, stressing its relational aspects. This perspective is not radically new. Rather it reapplies the church’s traditional stance on debt and interest that was upheld until the seventeenth century. Since then, Christians have elevated human reason above biblical revelation, meaning the church has had no prophetic voice when confronting a debt-induced financial crisis. It is time to break the silence.

The financial institutions

The financial system preaches ‘free market’ principles of loss for failure to others, but avoids having them applied to itself. Despite their industry’s very existence depending on taxpayer bailouts and assistance, managers continue to remunerate themselves extremely well, seemingly oblivious to their wider social and moral obligations. Given such hypocrisy and evident injustice, it is no wonder that we are entering a turbulent political period in which even the future of market-based economies is open to question.

The biblical alternative

There is a better way, but to follow it requires the courage to question the very foundations upon which finance has been built for the past four centuries. Rather than radical innovation, it means going back to how the church understood finance for the first three-quarters of its history.

(Relational biblical ethics) what has really been going on in the financial crisis. (This involves the following principles):

1. Lending freely to the needy is an act of love and neighbourly kindness.
2. Repayment of debt is a serious obligation.
3. Being in debt is tantamount to servitude itself because of the solemn promise to repay.
4. God’s ideal is for those made in his image to be free and clear of obligations (ie debt free)

The Bible’s teaching on interest and debt

Given the perspective of debt as ‘slavery’, it is no surprise that the Bible is clear that interest cannot legitimately be charged on a loan to a countryman, for such is to take advantage of the ‘bondage’ of another and an inherently unloving act… In the OT law, interest was prohibited within the Israelite community especially in the context of lending to the poor (Exodus 22:25; Leviticus 25:36, 37) but also between all fellow citizens (Deuteronomy 23:19). This prohibition is then upheld by David (Psalm 15:5), Ezekiel (18:8, 13, 17; 22:12) and Nehemiah (5:1–13).

Charging interest is folly for it attracts God’s retribution (Proverbs 28:8). As we have seen, Jesus assumes the prevalence of interest-free lending within his society and then radicalises the OT teaching for his disciples (Luke 6:34, 35). Moreover, he further condemns the taking of interest in the Parables of the Talents (Matthew 25:14–30) and Ten Minas (Luke 19:11–17). Here, in contrast to the servants commended for taking investment risk with their master’s resources, the wicked servant is judged for taking no chances. In the process, Jesus characterises taking interest from bank deposits as ‘reaping where one hasn’t sown’ (and so inherently unjust and exploitative); it is what ‘hard’ men do. As such, it is antithetical to both love of God and neighbour.

Personal implications

On an individual or family level, these biblical injunctions most clearly point to the desirability of being debt-free. While, in some cases, indebtedness may be unavoidable and not sinful per se, it places the borrower in ‘bondage’ with a strong moral obligation to repay. High debt levels and the resulting money worries constrain our service of God through career choice, often force both spouses to work, and can lead to marital pressures and divorce. God’s clear intention is for his children to enjoy the freedom that comes with their salvation and not to be enslaved by, or yoked to, unbelievers.Hence, we should limit consumption in order to give (Ephesians 4:28), and save to be debt-free as soon as feasible. If occupying a house, seek alternatives to avoid a mortgage or minimise its size (be that renting, using lease-to-buy arrangements,or raising equity stakes from family members or friends).

Then, use money to foster loving relationships rather than maximise financial return. Lend interest-free to help others get out of debt faster; take a stake in a relative’s home so that they can minimise their mortgage; or invest in a local or family business to sustain jobs and the local economy. Of course, all these desirable actions need to be tempered with prudence and wisdom, benefiting from the advice of others. But we shouldn’t let reverence of Mammon deprive us of the blessings promised to those who lend interest-free.

When considering where to invest one’s money, try to use the principles set out above to guide the choices. Attempt to avoid taking interest (through banks or bonds), own property or equities, and know in what you have invested God’s resources. This is unlikely to yield the best financial returns but it will embody relationally-positive principles in monetary form.

Conclusion

God’s intention is for those made in his image to enjoy freedom and stewardship. Instead, we indebt ourselves and others, inverting our moral and common sensibilities in the process and repeating the same mistakes of debt-fuelled booms and busts time and again. But God’s intention was not just our financial liberation. Rather, his ultimate purpose was to embody the gospel principle of debts forgiven and debt-slaves redeemed. Christ cancelled our certificate of debt on the Cross (Colossians 2:13–14). Christians should seek a debt-free future for themselves, their churches, and their society, to point to the exuberance and liberty of the truly redeemed life.