My subject is the economic and political crisis of our time, the relevance of economic democracy to it, and the role of Christian communities in struggling for social justice.
The idea that Christianity has a social mission is as old as the biblical message of letting justice flow like a river, pouring yourself out for the poor and vulnerable, and attending to what Jesus called “the weightier matters of the law,” justice and mercy. Throughout Christian history the church has given rise to movements that witness against war, slavery, exclusion and other social evils.
But modern Christianity introduced something new by virtue of its distinctly social consciousness. It started with the Christian Socialist movements in England and Germany. It crossed to the USA in the 1880s with the founding of the Social Gospel movement. It was not a coincidence that socialism, the social gospel, sociology, social ethics and the very ideas of social structure, social salvation, and social justice all arose at the same time; also, corporate capitalism and the trade unions.
In the Social Gospel, society became a subject of redemption. Social justice became intrinsic to salvation. Until the modern era, nobody knew there was such a thing as social structure. The founders of social Christianity reasoned that salvation had to be reconceptualized to take account of it. Salvation, to be saving, had to be personal and social. For the key to the Social Gospel was its novel claim that the church has a mission to transform the structures of society in the direction of social justice. Neither part of that sentence was a possibility before the rise of Christian Socialism.
The Social Gospel happened for a confluence of reasons that impacted each other. It had a back-story in the Anglican Socialism of Frederick Denison Maurice and Charles Kingsley. It took root in the USA as a response to the corruption of the Gilded Age and the rise of industrial society. It arose in black church communities as a response to the abandonment of Reconstruction and an upsurge of racial terrorism. It rode on the back of a rising sociological consciousness and literature. But above all, the Social Gospel was a response to a burgeoning labor movement. Trade unionists blasted the churches for doing nothing for poor and working class people. Christian leaders realized it was pointless to defend Christianity if the churches took an indefensible position on the politics of poverty.
There were 17 things wrong with the Social Gospel, beginning with the fact that most of it was optimistic, idealistic, middle-class, and not very brave about racial justice. Reinhold Niebuhr got to be famous by blasting the shortcomings of the Social Gospel, though he had shortcomings of his own.
But for all the things the Social Gospel got wrong, it got some crucial things right. It recovered the centrality of the Kingdom of God in the teaching of Jesus. It recovered the social justice emphasis of Hebrew and Christian scripture. It created the ecumenical movement. It was the wellspring of the Civil Rights movement through the ministries of Reverdy Ransom, Ida Wells-Barnett, Alexander Walters, Benjamin Mays, Pauli Murray, and Martin Luther King Jr.
For decades the Social Gospel was a mostly Protestant enterprise, but John Ryan planted the seeds of a Catholic Social Gospel that became a movement in the 1920s. With the founders of social Christianity–especially the great Walter Rauschenbusch and two leading Episcopalian activists, W. D. P. Bliss and Vida Scudder—the church began to say that if people suffer because of politics and economics, the church has to deal with politics and economics, and it has to do so by changing unjust social structures.
The Social Gospel expounded a vision of economic democracy that is as relevant and necessary today as it was a century ago. There were many different theologies and ideologies in the Social Gospel movement, but all took for granted that there had to be a stage beyond unfettered capitalism. A great deal of ecumenical social ethics has backed away from its origin as a movement for economic democracy, but at its best it has kept faith with the founders.
The Social Gospel was a response to the story of its time and a call for economic democracy and the common good. The story of our time is that the common good has been getting hammered for 30 years and we need economic democracy more than ever.
Global capitalism commodifies everything it touches, including labor and nature, putting everything up for sale. Nothing is exempt from the pressure of competition. Social contracts have vanished under threats of obsolescence and ruin, while the global market exploits resources, displaces communities, and sets off wealth explosions in wild cycles of boom and bust. The debates that we are having today about busting public unions, cutting Medicaid, and privatizing Medicare are by-products of 30 years of economic globalization and of massive, structural, politically-engineered inequality that exacerbate the worst aspects of globalization.
Wages have been flat for 35 years and inequality has worsened dramatically. The share of the nation’s income held by the top 1 percent has more than doubled since 1982. Today the top 1 percent of the U.S. population holds 39 percent of the nation’s wealth and takes in 25 percent of its annual income. The top 10 percent hold 70 percent of the wealth. The bottom 50 percent hold 2 percent.
The crash of 2008 wiped out $8 trillion of home value. The banks that frothed it up are sitting on $2 trillion of cash. They salted away their bailouts and went back to gambling in the swaps market, which pays better than boring investments in the real economy. Wall Street has recovered very nicely, but every trade deal we have signed has resulted in jobs leaving the United States, we have upwards of 30% real unemployment in urban neighborhoods, and our prisons are stuffed with people of color.
Neo-liberal theory says that the integration of national economies into the global economy through trade, direct foreign investment, short-term capital flows, and flows of labor and technology has “flattened” the world, so deal with it. In a flat world you either compete successfully or are run over; there is no political remedy. Any nation that wants a growing economy has to wear a one-size-fits-all “golden straightjacket” that unleashes the private sector, minimizes government, eliminates tariffs, deregulates capital markets, and allows direct foreign ownership and investment.
But neo-liberals exaggerate the futility of attempts to channel economic forces. Contrary to the story they tell, the U.S. did not ensure its prosperity by donning the golden straightjacket and relinquishing its manufacturing base. From the late 1940s to 1975, productivity and wages soared together in the United States, creating a middle-class society; meanwhile there were no bank crises, as New Deal reforms kept commercial banks out of the investment business.
But wages flattened in the mid-1970s and productivity kept soaring. The rich got richer in the 1980s and 1990s while everyone else fell behind, taking on debt to keep from drowning. During this period nearly every manufacturing-oriented society outperformed the U.S. in income growth and did so with more equitable distributions of income. In the 1980s the U.S. cut the marginal tax rate from 70 percent to 28 percent and cut the capital gains rate from 45 percent to 20 percent. That was a revolution, a blowout for politically engineered inequality. Then the global integration of two radically different models of growth—debt-financed consumption and production-oriented export and saving—created a wildly unstable world economy featuring asset bubbles and huge trade imbalances.
First the U.S. hollowed out its industrial base that paid decent wages, providing incentives to firms that made things to make them elsewhere. Then it rang up enormous trade deficits that left the U.S. dependent on China and Japan to finance its debt. Then the economy cratered after the debt resort reached its outer limit in the housing market and the mortgage bubble burst. For 20 years we were told that governments are passé in this area. But when the housing market crashed, these supposedly obsolete governments coughed up $12 trillion in two months to save the system from itself.
It started with people who were just trying to buy a house of their own; who had no concept of predatory lending; and who had no say in the securitization boondoggle that spliced up various components of risk to trade them separately. It seemed a blessing to get a low-rate mortgage. It was a mystery how the banks did it, but this was their business; you trusted they knew what they were doing. Your bank resold the mortgage to an aggregator who bunched it up with thousands of other sub-prime mortgages, chopped the package into pieces and sold them as corporate bonds.
Securitizations and derivatives are great at concocting extra yield and allowing the banks to hide their debt. Broadly speaking, a derivative is any contract that derives its value from another underlying asset. More narrowly, it’s an instrument that allows investors to speculate on the future price of something without having to buy it. Credit-default swaps are private contracts that allow investors to bet on whether a borrower will default. In 1999 that market was $130 billion; by 2008 it was $65 trillion, and at the heart of the meltdown. AIG’s derivatives unit was a huge casino selling phantom insurance with hardly any backing. Speculators gamed the system. Mortgage brokers, bond bundlers, rating agencies, and corporate executives made fortunes selling bad mortgages, packaging the loans into securities, handing out inflated bond ratings, and putting the bonds on balance sheets. Banks got leveraged up to 50-to-1 and kept piling on debt. The mania for extra yield fed on itself, blowing away business ethics and common sense.
So things got pretty scary in September 2008. We were treated to the spectacle of a bewildered, perhaps traumatized U.S. president remarking, “This sucker might be going be going down.” He was referring to the U.S. economy, and then a new president was elected.
I believe that Barack Obama is one of our better presidents. And I deeply regret that he squandered opportunities in his first two years to make huge, historic, attainable gains for justice. I am not invoking a left-wing fantasy of who he should be. His job is to be Commander in Chief of the American Empire, and I never thought that electing Obama would be something like electing Martin Luther King Jr. But Obama could have made colossal gains that would not have required any break from the moderate, liberal-leaning perspective on which he campaigned. He could have broken up the big banks. He could have fought for a public option in healthcare. He could have gotten a strong immigration reform bill. And he could have fought for a second stimulus for job creation and clean energy.
I do not mean that he could have done all four of these things. Any two of them would have required all the political capital he possessed in 2009 and 2010. But on no issue did he plant a flag, risk legislative defeat, and fight for the historic achievement that was within reach. Instead he played for half of what he wanted and took what he could get from the 60th vote in the Senate. Then Democrats lost the House and we got debt ceiling hostage politics. In both halves of his first term the president demoralized his progressive base, so I ended up writing a book about why progressives should not give up on Obama. The time for that argument has passed, but I want to say a word about things that still matter, which will lead to my argument about economic democracy.
A few weeks into his presidency, Obama met with the CEOs of the big banks. They were not so swaggering back then. The megabankers knew that if the new president cut them down to size, he would reap an enormous political windfall. People across the political spectrum would have welcomed it. The Tea Party might not have taken off. Any bank that is too big to fail holds the country hostage, and it’s too big to be regulated too. Today 7 banks control 73 percent of the nation’s assets. Fifteen years ago that figure was 16 percent. That’s the path we are on, a staggering concentration of power that has turned the big banks into giant hedge funds, trading on their own accounts.
Obama had two golden opportunities in this area. The first was in March 2009, when he told the megabankers, “My administration is the only thing between you and the pitchforks. We have to work together.“ The bankers nodded in fake agreement and they got together, forming the CDS Dealers Consortium, through which they fought every plank of the Dodd-Frank bill. The second opportunity was the Brown-Kaufman amendment to Dodd-Frank, which would have allowed no bank to risk more than 3 percent of the nation’s GDP or hold more than 10 percent of the nation’s total insured deposits. This amendment got 30 Democratic votes and 3 Republican votes in the Senate even though Obama and the Senate leadership opposed it.
Brown-Kaufman would have passed had Obama supported it. He came out against it because he wanted to reinstate the wall between commercial and investment banking. In 1999 the Clinton Administration teamed with Phil Gramm to tear down the Glass-Steagall wall between commercial and investment banking, which opened the door to the megabank empires and mergers of the Bush years. The federal government provides deposit insurance and other safeguards to ensure that America has a stable banking system. These privileges were not created to give unfair advantages to banks operating hedge funds or private equity funds. Banks should not be allowed to speculate with cheap money that the government safety net provides. The current system allows banks to make trades conflicting with the interests of their own customers, which has fueled a riot of speculation.
The ostensible purpose of Wall Street is to raise money to finance making things in the real economy. But CDO deals are not investments. They do not create any actual bonds or mortgages, or add anything of value to society. They are pure gambling on whether somebody else’s bonds will succeed. They are like side bets at a casino, except the Federal Reserve, implicitly, protects these bets. According to the SEC, Goldman Sachs, Citigroup, and other firms have looted their own customers by creating derivatives that are designed to fail, and then betting against them.
The Volcker Rule, which the president supported, was supposed to stop that. But to pass the Dodd-Frank bill, the Volcker Rule was gutted with exemptions for trading in Treasury bonds and bond issues by government-backed entities. As always, these exemptions led to others, and today the Volcker Rule is riddled with them. Paul Volcker’s proposal was three pages; in the Dodd-Frank bill it was 10 pages; today it is 400 pages of exemptions and loopholes, a monument to the lobbying power of Wall Street.
The second issue was the public option in healthcare. Here one mistake led to another. It was wrong to exclude advocates of single payer from the discussion. We were pushed aside as irrelevant, and many activists on this issue were so angry at being disregarded that they didn’t get behind the public option. That was a mistake on their part, because the public option is a magic bullet. Health care is a fundamental human right that should be available to all people regardless of their economic resources. A decent society does not relegate the poor and underemployed to second-class status. When wealthy and middle-class people have to rely on the same healthcare system as the poor, they use their political power to make sure it’s a good system. The public option was the acid test of whether we were going to structurally reform the system or just make the insurance companies take more customers. If people are allowed to choose a government plan, they will do so—which could lead to a universalized Medicare, with everybody in and nobody out.
A good public plan would be open to all individuals and employers that want to join. It would allow members to choose their own doctors. It would eliminate high deductibles. It would allow members to negotiate reimbursement rates and drug prices. The government would run it. And it would be backed up by tough cost controls and a requirement that all citizens have health coverage.
When Obama took office there was a serious momentum for a public option. He supported it, the House passed a weak version of it, and there was a majority for it in the Senate. This was the moment to take a stand, spend some capital, and fight for something that made a huge difference. But when the president learned he was eight or nine votes short of beating a filibuster in the Senate, he bailed out, and he didn’t bother to tell us, so many of us spent months pushing for something that was already dead. That made a lot of progressives very angry, and we were only six months into Obama’s presidency.
In this area, however, Obama won an enormously important victory that must be defended. He abolished the worst abuses of the health insurance companies and made a huge gain toward universal health coverage. It says a great deal about Obama as a moral being that he risked his presidency, knowing it would hurt him politically, to gain health coverage for millions of poor and vulnerable people.
Obama has dealt with the most obstructionist opposition ever faced by a president. He had barely been inaugurated when the rallies began against him, with people shouting, “I want my country back.” He hadn’t done anything yet, but they had already lost their country. The placards carried a picture of America’s first black president, in case anybody needed an interpretation. Then the stimulus bill got zero Republican votes in the House and three expensive Republican votes in the Senate. We had lost 4 million jobs in the past year. We had lost 741, 000 jobs in the month that Obama was inaugurated. The nation was freefalling into a Depression, yet somehow it was horribly wrong to inject a stimulus that kept us from reliving 1933. On the basis of that utterly absurd position the Tea Party became a powerful force in American politics, the Republican Party careened to the Right, and immigration reform was no longer possible.
Only a few years ago there were upwards of 23 Republican votes in the Senate for the Dream Act. For the past five years there have been zero Republican votes. That is a perfect snapshot of what has happened to U.S. American politics. Obama thought, in the early going, that immigration reform would be a good third year issue. Today it is simply a moral imperative, and a long shot politically.
I am working my way to point 4, which will lead to my argument for economic democracy. But both subjects require some run-up. Simon Johnson, formerly chief economist of the International Monetary Fund, contends that the finance industry has effectively captured the U.S. government. During his early career at MIT Johnson tried to be skeptical about this, but then he went to the IMF and got a close look at the symbiotic relationships between the world’s economic elites and its governments. In the U.S., he says, it goes far beyond mere access or even collusion. Here the two career tracks of government and high finance are melded together.
When the IMF enters the scene of a crash, the economic part is usually straightforward: nations in crisis are told to live within their means by increasing exports, cutting imports, and breaking up bankrupt enterprises and banks. Every nation that is not the USA gets that prescription in a crisis. But the U.S. controls the IMF, it has a powerful and well-connected oligarchy, and it pays its foreign debts in its own currency. So our recovery began by paying off Wall Street. Obama was co-opted on that before he began, by rounding up Democratic support for the Paulsen plan.
South Korea and Indonesia had crashes in 1997; Malaysia had one in 1998; Russia and Argentina both had more than one; Japan had a lost decade; and then came the meltdown of 2008. In every case, a financial oligarchy rigged the game in its favor, built an empire on debt, overreached in good times, and brought the house down on everybody. When the house implodes, elites do what they always do: They take care of their own. To get a different result, a nation has to take control of the problem and break the grip of the oligarchy. Otherwise you muddle along in a lost decade of your own, further entrenching the oligarchy.
The usual IMF playbook is clear: find a bottom, clear out the clutter, get the fiscal and monetary houses in order, and, if possible, shake up crony capitalism. Johnson says, there is always going to be an oligarchy, so the best we can do is shake it up from time to time. To this end he recommends new antitrust laws, although he cannot say what they would look like, and he says it’s pointless to cap executive compensation, since they always find a way. In his book, Thirteen Bankers, Johnson makes a good case for shrinking the big banks.
If we take the existing system for granted, that prescription is about the best we can do. But we need to talk about something bolder and more creative than the IMF playbook: renewing this country with a massive investment in economic democracy, including turning the big banks into public utilities.
For over two centuries, Americans have debated two fundamentally different visions of what kind of country the U.S. should be. One is the vision is of a society that provides unrestricted liberty to acquire wealth. The other is the vision of a realized democracy in which rights over society’s major institutions are established. In the first view, the right to property is lifted above the right to self-government, and the just society minimizes the equalizing role of government. In the second view, self-government is considered superior to property, and the just society places democratic checks on social, political and economic power. In the first vision, the goal is to attain enough success to stand apart from others, not have to worry about them, and perhaps look down on them. In the second vision, a just society reduces the punishments of failure and the rewards of success, subordinating private interest to the common good.
Both of these visions are ideal types, deeply rooted in U.S. American history. Both have limited and conditioned each other in the U.S. experience. But in every generation one of them gains predominance over the other, shaping the terms of debate and possibility, telling the decisive story of its time. Today an extreme version of the first vision is being asserted very aggressively. The story of our time, in this view, is that a great people is being throttled by a voracious federal government. Americans are over-taxed; government is always the problem; somehow the federal government caused the financial crash; we have a debt crisis because we have too much government; and cutting taxes at the upper end is always in order.
Today the political Right thrives on a deeply felt dichotomy between the deserving and the undeserving. It is driven primarily by its rage against the supposedly undeserving and the liberal elites who are said to coddle the undeserving. This movement is overwhelmingly white, middle-class, and either middle-aged or elderly. At the grassroots level, much of this movement is not hostile to Social Security or Medicare, unlike the professional ideologues that are exploiting it. Conservative activists are quite certain that they deserve their own Social Security and Medicare. But they are outraged that undeserving people get benefits from the government, and they resent that they are losing their racial privileges. In their version of the American dream, there is no such thing as the common good. There is only the sum of individual goods, which many people do not deserve.
These resentments and this ideology are far from new in U.S. American life. But this ideology, a throwback to Social Darwinism, has no standing whatsoever in the tradition of social ethics upheld by the ecumenical Christian churches. Here we begin with the recognition that we owe obligations to each other, that the Bible teaches a preferential option for the poor and oppressed, and that there is such a thing as the common good. When the sum of individual goods is organized only by a capitalist economy, it produces a common bad that destroys personal goods along with society. I have four points to make about that.
1. Americans are not overtaxed. The total tax burden today is at its lowest point since 1958. In 1999 Americans spent 28 percent of their income on federal, state, and local taxes, which was the usual amount going back to the early 1970s. Today that figure is 23 percent. As a percentage of GDP, American taxation is at its lowest level since 1950, 14.5 percent.
2. This is how we got in debt. If we had stuck with the Clinton tax rates, our national debt today would be minimal or non-existent. Our nation’s debt exploded because during the Bush years we cut the marginal rate and capital gains taxes without paying for either, we established a drug benefit that we didn’t pay for, and we fought two wars that we didn’t pay for. These expenditures doubled the nation’s debt in seven years, and the record keeps mounting, accounting for three-fourths of the new debt that has accumulated during Obama’s presidency. Much of the remaining new debt is cleanup for the financial crash.
Today wealthy Americans pay income taxes at the capital gains rate, 15 percent. Investment managers earning billions per year are allowed to classify their income as carried interest, which is taxed at the capital gains rate. Constantly we are told that the investor class would lose its zeal for making money if it had to pay taxes on its actual income or if the capital gains rate were raised. But there is no evidence for this claim. No investor passes on a promising investment because of the tax rate on a potential gain.
An ethically decent tax system would have additional brackets for the highest incomes, as the U.S. once did. It would have a bracket for $1 million earners and a bracket for $10 million dollar earners and a bracket for $100 million earners and so on. It would lift the cap on the regressive Social Security tax, taxing salaries above $110,000 per year. It is absurd that someone making $1 million per year pays no more into Social Security than someone making $109,000. Reforming Medicare is going to be difficult and complex, because Medicare is a four-sided contraption of political compromises resting on fee-for-service medicine. But Social Security is simple; a minimally decent adjustment would fix it for decades.
3. A federal budget is a moral document. If we scaled back America’s global military empire and reinstated a progressive tax system, we could eliminate the federal debt by 2021 without cutting Social Security, Medicare, Medicaid, education, or research. Capital gains could be taxed as ordinary income. U.S. foreign income could be taxed as it is earned. The subsidies for oil, gas, and coal companies could be eliminated. A tiny tax on credit default swaps and futures could do enormous good, plus a leverage tax on the megabanks.
I stress that these are pedestrian proposals. We would still be way below European levels of taxation. All of it together takes a mild pass at the principle that people should pay taxes on the basis of their ability to do so.
4. Tax rates are not the most important factor contributing to economic growth. Creating a healthy and productive workforce is far more important than the fluctuations in tax rates. Educating the workforce for 21st century jobs and investing in research and technology are more important. Developing a strong infrastructure and saving for investment are at least as important as tax rates.
Today the economy is sluggish because of weak consumer demand caused by stagnant wages, job uncertainty, and the ongoing ravages of the mortgage disaster. Europe opted for austerity plans, and today nearly every European nation is suffering for it. We need to renew the country by making massive investments in a clean energy economy. Labor costs, equipment costs, and the cost of capital will never be lower than they are today. The U.S. has under-invested in infrastructure, education, and technology for decades. A national infrastructure bank, once created, would get serious money plowed into infrastructure rebuilding on an ongoing basis.
If we can spend trillions of taxpayer dollars bailing out banks and setting up bad bank contraptions to eat Wall Street’s toxic debt, we ought to be able to create public banks that do good things. Public banks could finance start-ups in green technology that are currently languishing and provide financing for cooperatives that traditional banks spurn. They can be financed by an economic stimulus package approved by Congress, or by claiming the good assets of banks seized by the government, or both.
Or they can be established at the state level. Today the only state that isn’t reeling from the credit crunch, North Dakota, is the one state that owns its own bank. North Dakota has its own credit machine, making it less dependent on Wall Street than the rest of the country. The state of Washington is now establishing a state bank, and more than 20 states have significant movements to establish state banks, notably Massachusetts, Illinois, Michigan, Virginia, Missouri, New Mexico, and Vermont. If these movements succeed, that will be a huge step in the direction of economic democracy.
Economic democracy is about extending the values and rights of democracy into the economic sphere. It features mixed forms of worker, community, and mutual fund or public bank enterprises. I do not believe that the factors of production trump everything. But I do believe that those who control the terms, amounts, and direction of credit play a huge role in determining the kind of society that he rest of us live in.
People harder and more efficiently when they have a stake in the company, when it’s their company. In Spain, the Mondragon network is spectacularly successful. In the U.S. we have 14,000 firms with worker-ownership plans, and approximately 1,000 are fully worker-controlled. These are building blocks for a movement.
On the way to a serious movement, economic democracy is about building up institutions that do not belong wholly to the capitalist market or the state. It begins by expanding the sector of producer and consumer cooperatives, community land trusts, and community finance corporations. Credit unions play a key role. One of the best things the Occupy movement did was encourage people to join credit unions.
But merely expanding the cooperative sector is not enough. Cooperatives usually prohibit non-working shareholders, so they attract less outside financing than capitalist firms. They are committed to keeping low-return firms in operation, so they stay in business even when they can’t pay competitive wages. They are committed to particular communities, so they are less mobile than corporate capital and labor. They smack of anti-capitalist bias, so they have trouble getting financing and advice from banks. They maximize net income per worker rather than profits, so they tend to favor capital-intensive investments over job creation.
Most of these problems are virtues, and the problematic aspects can be mitigated with tax incentives. But we also need something bolder and more visionary. We need forms of social ownership that facilitate democratic capital formation, have a greater capacity for scaling up, and are more entrepreneurial. Specifically, we need public banks and mutual funded holding companies in which ownership of productive capital is vested. The companies lend capital to enterprises at market rates of interest and otherwise control the process of investment. Equity shareholders, the state, and/or other cooperatives own the holding companies or public banks.
Mutual fund models contain a built-in system of wage restraints and facilitate new forms of capital formation. They have nothing to do with nationalization, and investors still seek the highest rate of return. This approach does not rest on idealistic notions about human nature; and it does not need a blueprint. I have favorite models to push, but the key thing is to expand the social market in ways that make sense in particular communities.
There is also a key role for old-fashioned, large-scale publicly controlled companies in certain areas. Most of the world’s economic powers have them. Publicly controlled corporations produce 75 percent of the world’s oil. In France, Spain, Belgium, Germany, Italy, the Netherlands, Turkey, and South Korea, and governments run high-speed rail systems that make U.S. American systems look pathetic. Japan has the world’s largest public bank—Post Bank. Brazil has more than 100 publicly owned or controlled enterprises, including major banks, utilities, and an oil company renowned for deep-water exploration, Petrobas. The U.S. American animus against public ownership is going to look increasingly strange as the rest of the world selectively uses it as one powerful tool among others.
Most of our traditions in social theory and Christian social ethics have operated with unitary ideas of capitalism and socialism, as though each were only one thing. Economic democracy must be built from the ground up, piece by piece, breaking from the universalizing logic of state socialism, taking seriously that there are different kinds of capitalism. The tests are pragmatic. The U.S. Pacific Northwest has a network of longstanding, highly successful plywood cooperatives. Some plywood workers choose to work in conventional firms instead of the cooperatives. No political economy worth building would force them into a different choice.
But having a real choice is the key to a better alternative. A politics that expanded the cooperative and social ownership sectors would give workers important new choices. The central conceit of neoclassical economics could be turned into a reality if meaningful choices were created. The textbook conceit is that capitalism doesn’t exploit anyone, because labor employs capital as much as capital employs labor. But in the real world the owners of capital nearly always organize the factors of production. To expand the cooperative and other social market sectors would give choices to workers that neoclassical theory promises, but does not deliver. It would show that there is an alternative to a system that stokes and celebrates greed and consumption to the point of self-destruction.
The earth’s ecosystem cannot sustain a U.S. American-level lifestyle for more than one-sixth of the world population. The economy is physical. There are limits to economic growth. Global warming is melting the Arctic ice cap at a shocking pace and destroying wetlands and forests around the world. There is no legitimate argument against a government-sanctioned Green GDP account that reflects the depletion of our natural resources and the degradation of our environment. But after 30 years of talking about it the federal government still does not have metrics for sustainability, because the coal and oil companies don’t want to be charged for the costs they impose on the environment.
Charles Kindleberger, in his major work, World Economic Primacy, 1500-1990, described the rise and fall of the great economic powers of the modern world. The chief internal causes of decline that he identified were increased consumption, decreased savings, resistance to taxation, corruption, mounting debt, finance becoming more dominant in the economy than industry, and above all, military overreach. Kindleberger was not sure, near the end of the book, whether the U.S. had entered the downward path. Today, reading this list of causes is like looking in a mirror.
For those of us who belong to a faith tradition, having a religious faith keeps us in the struggle against for social justice. In Hebrew and Christian scripture, the test of ethical action is how it affects the struggles of oppressed and excluded people. I am for almost anything that helps our beleaguered seminaries, religious congregations, and other communities of moral memory hold on against a dominant culture that denigrates the poor and vulnerable. And I am for anything that helps us creatively refashion our religious institutions for a global, interdependent, interfaith world. We need to uphold the best of our traditions of social Christianity, ecumenism, and the numerous liberation theologies, and we need to do it in a way that is global, connected to world cultures and societies, and engaged in interreligious dialogue and comparative theology.
In most religious traditions the local congregation is the fundamental organizational vehicle of religious practice. But congregations have never been at the forefront of social justice activism. In the religious sphere, the strongest social justice organizations are ecumenical and interfaith networks. The living wage campaign organized by the National Council of Churches, Let Justice Roll, is an important recent example, as is Interfaith Worker Justice, a Chicago-based network of Christian, Jewish, Islamic, and other religious communities. Interfaith Worker Justice was founded in 1996 and focuses on wage theft, corporate abuse, immigration reform, raising the federal minimum wage, unemployment, and the right to organize. It has 70 affiliated organizations; it does advocacy work across the USA, and its policy department is the nation’s leading producer of interfaith resources on economic justice issues.
In community organizing, there are four major interfaith networks working on economic justice issues. All are Alinsky-style organizations that create coalitions of religious leaders across a geographic area. Number one is the Industrial Areas Foundation (IAF), founded by Saul Alinsky in 1940 in Chicago. IAF is known for its work on anti-poverty and housing issues, and for its focus on building coalitions to create power, understood as the ability to change society. The second biggest interreligious network is the Gamaliel Foundation. It was founded in 1968 in Chicago to support the Contract Buyers League, an African American organization fighting discriminatory banking policies. At the national level, Gamaliel focuses on immigration, health care, and transportation; at the local level it focuses on whatever its highly intentional steering committees decide; and it currently has nearly 60 affiliates in 18 U.S. states and five provinces of South Africa.
Number three is the PICO National Network. PICO was founded in 1972 in California and was formerly called the Pacific Institute for Community Organizing. Instead of organizing on the basis of common issues, as in the Alinsky model, PICO employs a congregation-community model that focuses on building relationships and networks sharing social justice values. PICO has 44 affiliated federations and 8 statewide networks operating in 150 cities and towns, and it is thriving. PICO is on its way to becoming the biggest group, and it is already the one with the most energy and momentum. The fourth major interfaith network is the Direct Action and Research Training Center (DART), founded in 1982 in Florida. DART works on many economic issues, but it’s best known for training community organizers and social justice leaders, and it focuses on powerlessness, not symptoms.
Community organizing is inherently limited, it has trouble scaling up, and it burns people out. But it builds personal relationships across racial, ethnic, religious and class lines. It empowers marginalized communities. And it does these things better than any kind of social justice activism that I know. In the 1980s and ‘90s a great deal of movement theory opted for resource mobilization theory, emphasizing financial resources and organizational leadership. The interreligious organizations followed this trend, but in my experience they usually resisted the implication of resource theory that human beings are merely bearers of structures, or dupes of bad culture.
Religious activists are big on faithfulness and hanging in there. We are stubborn in holding out for face-to-face meetings and building relationships. We usually recognize that giving voice to grievances is a major part of social justice work and that grievances mobilize individuals to join movements. In other words, progressive religious activists have long practiced what is now called “framing.” Like the political Left generally, we may spend too much of our limited money on community organizing, and now the decline of the churches has caused every denomination to slash its public policy and lobbying operations, in a time of atrocious politics. But today there is more grassroots, interreligious, social justice organizing going on than ever. I’ve been involved in this work for 30 years, and I’ve never been hopeful about the movement for it in this country—until now. A movement that focuses on inequality and the process of investment is coming, and religious activists have a role to play in it.
We need new forms of community that forge ties of trust and solidarity across our divisions of race, ethnicity, gender, class, religion, nationality, and sexual orientation. If those of us who are Caucasian or mostly Caucasian fail to interrogate white supremacism, we will resist any recognition of our own racism. If those of us who are male fail to interrogate our complicity in sexism, we will perpetuate it. If those of us who are Christian fail to repudiate Christian supercessionism, and exclusivism, we will perpetuate the evils that come with them. If those of us who are heterosexual fail to stand up for the rights of LGBTQ individuals and communities, we will have an oppressive society and church. If we swear our highest loyalty to our nation, we will perpetuate U.S. American imperialism.
Our faith traditions are not relevant in the sense of teaching a theory of politics or economics. Jesus did not talk about things that we talk about in social ethics: problems of proximate means and ends, theories of justice, calculated consequences, defending structures of justice. But the teaching of Jesus impels us into struggles for social justice and holds us there, whether or not we succeed. That is its social relevance. To love God above all things, and your neighbor as yourself, is the motive force of the struggle for the flourishing of life.
The love ethic of Jesus makes you care, makes you angry, throws you into the struggle, keeps you in it, and helps you face another day. We are not in control. It is not up to us to fulfill God’s will for the world. In drawing closer to God we are thrown into work that allows others to share in the harvest, and that is enough. No one can say if our efforts will make a difference. But the biblical imperative to pour yourself out for the hungry and satisfy the desires of the afflicted is utterly certain. After our struggles have ended, it is the ever-gracious God of glory and love who will make something of them.
To hang in there against a national myth that opposes the common good and a financial oligarchy that is the most powerful force in our nation’s life, one has to have a certain stubbornness and moral outrage. And it helps to have a spiritual wellspring. May we have all three.
Gary Dorrien is the Reinhold Niebuhr Professor of Social Ethics at Union Theological Seminary and Professor of Religion at Columbia University. Professor Dorrien is the author of 16 books in fields ranging from ethics to social theory, theology, philosophy, politics, and history. Cornel West describes him as “the preeminent social ethicist in North America today,” and philosopher Robert Neville called him “the most rigorous theological historian of our time.” We thank Professor Dorrien for graciously offering the Consortium the opportunity to publish this wonderful talk, which was the keynote address (April 11, 2014) at “Christianity and Capitalism,” the 4th Annual New England Annual Studies Conference hosted by Harvard Divinity School.