On Economics, Values, and Meaning

As an undergraduate student at Wittenberg University in the late 1970’s, I chose to major in economics in the belief that no other subject so adequately explained the workings of everyday life. By understanding economics, or so I believed, one could understand the efficient allocation of resources, the affects of competition on prices and jobs, the distribution of wealth and income, the proper role of government and law in regulating business and the economy, the impact of advertising on the behavior of consumers, and the realities of business cycles and international trade. The true study of economics is not restricted to quantitative formulas and complex computer models – the stuff of Ph.D. programs – but concerns itself with matters difficult to quantify – political decision making, human psychology, sociology, and culture. Although the days when I debated the merits of John Maynard Keynes and John Kenneth Galbraith, Milton Friedman and Adam Smith, are long gone, the theoretical and practical distinctions of their philosophical differences continue to interest me.

I wish here to reflect not on capitalism or socialism, not on the relative merits of free enterprise versus a centrally planned economy – I wish instead to focus on the morality, values, and ethics of society’s grasp for excess wealth and the growing gap between the rich and the poor. What are the spiritual dimensions of our present economic circumstances? Is there a way to alleviate poverty and suffering, reduce gross inequalities, and improve the quality of one’s life?

Jim Wallis, the founder and executive director of Sojourners, poses such questions in Rediscovering Values: A Moral Compass for a New Economy (Howard Books, 2010). Wallis recently spoke at the Friends Select School in Philadelphia, where he argued that the global economic crisis “provides the rare opportunity to ask some fundamental questions about our most basic values.” He does not approach economics from a left or right framework – he is neither a capitalist nor a monetarist nor a Marxist, neither a liberal nor a conservative – rather, he examines the American economy from the pulpit, as a progressive, socially conscious evangelical preacher with an activist bent. He acknowledges that the 20th century created and distributed a great volume of goods and services with unprecedented efficiency. But he suggests that “with these great advances, the moral weight of our decisions becomes greater than ever before.” Is the purpose of business simply “restricted to turning a profit” or can it become something more? Does self-interest always have to be the prime motivational force of business conduct and personal behavior? Can one make sound financial and economic decisions without sacrificing moral values, fairness, and compassion?

Market forces are important, but the ability and power of markets to solve all social and economic needs has limits. Market values do not govern personal and family relationships, ethics and religion, service to the community, and matters of social justice. It is impossible to place a monetary value on a sense of personal contentment, or a life enriched by poetry, music, art, service to others, and closeness to family and friends. This occurred to me last weekend when I attended a fundraiser at the Abington Friends School, which in the Quaker tradition attempts to instill an appreciation for a simpler life, one of mind and spirit, a life committed to responsible stewardship and community service, with little emphasis on material accumulations. As several teachers and staff wowed the audience with beautiful poetry and song, including original compositions accompanied by piano and guitar, I was struck with how self-satisfied each appeared. Despite modest salaries and little public acclaim, these dedicated mentors and educators displayed a sense of personal contentment rarely seen in the corporate world.

Those who need validation from status symbols and accumulated wealth must often sacrifice a sense of purpose and meaning and personal fulfillment. “Without a clear sense of self, a strong identity, and a community of purpose,” Wallis notes, “our default mode is to identify ourselves by the things we own.” But such an identity is inherently weak and can easily dissolve and be taken away.

For some, the market is sacred and not to be questioned, more sacrosanct than religion. How else to explain a lack of outrage over $20 million severance packages handed out to CEO’s of failing companies, or billions of dollars in bonuses awarded to executives of the very institutions that contributed to our present economic woes, while the jobs of millions of Americans have been eliminated? Where is concern for the common good and a sense of neighborly compassion? Wallis suggests that “a sense of entitlement is not just an attitude we can blanketly attribute to the poor, but is a real problem of many rich people, who believe they are entitled to be treated like kings and queens of old, whether or not they are successful.”

American culture is fascinated with the super rich and the fabulously wealthy; we admire their mansions, covet their fancy cars, emulate their fashion trends and secretly desire invitations to their dinner parties. Our enchantment with wealth causes many of us to buy “things we don’t need with money that we don’t have.” We live in an age of materialism, where mass consumption results in an over emphasis on the clothes we wear, the cars we drive, the houses we own – important sources of identity for many Americans. But what does it say about the ethics and morality of a society that accepts excessive consumerism and gross disparities in income and wealth, while millions of Americans are unemployed, tens of thousands are homeless, millions more are undernourished and uninsured, and half the world lives in extreme poverty?

In the Theory of the Leisure Class, the classic 1899 treatise on wealth, Thorstein Veblen coined the phrase “conspicuous consumption” to describe the lavish excesses of the Gilded Age. He explained that, for a certain segment of the upper class, wasteful luxury and extravagance helped to demonstrate one’s wealth and status. Since Veblen’s day, these excesses have become more prevalent, and at times more profuse. In Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich (Three Rivers Press, 2007), Robert Frank describes the modern-day practitioners of conspicuous consumption. In one chapter, he examines the super-rich yacht culture, where 100-foot yachts are considered tiny and unimpressive, as 300, 400, and even 500-foot vessels are required to keep pace in this status conscious crowd. In a world where half the global population still lives in extreme poverty, paying upwards of $100 million for a boat seems morally unconscionable.

The gap between rich and poor – indeed, between rich and everyone else – is on the rise. In 1965, the ratio of CEO salaries to average worker pay was 24-to-1. By 2004, that same ratio had risen to 431-to-1. The family of Walmart’s founder, Sam Walton, has an estimated net worth of $90 billion, which translates into one American family with a net worth roughly equivalent to the combined net worth of the bottom 40% of Americans, or 120 million people. And while the CEO of Walmart makes 900 times the salary of the company's average employee, his $17.5 million salary is nothing compared to the salaries paid to CEOs of some of the big financial institutions. In 2005, Richard Fairbanks of Capital One Financial received compensation of $249.4 million. In 2006, Angelo Mosilo, the CEO of Countrywide Financial, which led the way in subprime mortgages and dishonest lending practices, “earned” $141.98 million, ranking him seventh on the Forbes list of best-paid CEOs.

Does anybody really believe that this is a good thing? Does society benefit from such gross income disparities? Wallis argues that “when wealth becomes more and more concentrated, bad things begin to happen to us: social bonds begin to unravel, societal morale erodes, and resentment sets in when we perceive great unfairness.” As I wrote in “Is This Guy Really Worth a Billion Dollars?”, a certain amount of income inequality is a good thing, necessary to promote efficiency, to provide appropriate incentives for hard work and productivity. However, some CEO salaries and wage disparities are simply not justified, and they represent a moral and spiritual failure of our corporate and economic structures. The survival-of-the-fittest mentality, that greed is good and self-interest a necessary force for a sound economy – the notion that, if left to its own devices, the market will work itself out – are concepts that have failed a great many people, even as a select few have prospered. Is it any surprise that the two years in which income inequality was at its highest in this country – 1928 and 2007 – were years that preceded economic collapses?

Some believe that economic inequality is a reflection of one’s value to society, and that those who are rich are deservedly so, while those who are poor have simply not tried hard enough, or have done something wrong. It is easy for many people to forget that wealth is not a reflection of self-worth, or one’s value to humanity, and that much of life’s riches are distributed to those who, through a combination of many complex factors – hard work (up to a point), chance, circumstance, opportunity, and luck – determines one’s fate in life. King Solomon, a man of great wealth in his day, recognized this in the book of Ecclesiastes:

The race is not to the swift or the battle to the strong, nor does food come to the wise or wealth to the brilliant or favor to the learned; but time and chance happen to them all.

Recognizing that financial and economic success is not strictly or always the result of hard work, ingenuity, and merit – and that not all who fail to achieve great wealth are somehow less worthy human beings – is a first step in creating a more compassionate society. Somewhere along the way, we seem to have lost sight of the common good; we have failed to recognize that the human race is in dire need of a helping hand, some understanding, and kindness, and that we are all in this journey together. Perhaps a search for meaning and purpose, in our work, in our relationships, in our lives, will lead the way to creating a more just and compassionate world, and an economic system that rewards hard work and success without leaving all others behind.